Stop Leaving Money on the Table: The Ultimate 2026 Tax Checklist for New Haven Small Businesses

New Haven, CT – February 16, 2026 – Small business owners in New Haven and across Connecticut face significant tax changes this year. The 2026 tax season brings expanded deductions, modified credits, and structural updates that can save thousands when properly claimed. Missing these opportunities can lead to overpayment and reduced profitability.

This checklist outlines actionable steps to maximize your 2026 tax position before filing deadlines arrive.

Claim the Expanded Qualified Business Income Deduction!

The Qualified Business Income (QBI) deduction has been permanently expanded for 2026. This deduction now allows eligible business owners to claim 23% of qualified business income (increased from 20% in previous years).

Action steps:

• Calculate your qualified business income from your Schedule C, K-1, or partnership return
• Verify your filing status: single filers earning $75,000+ or joint filers earning $150,000+ qualify for the full deduction with expanded phase-in ranges
• Claim the new $400 minimum deduction if you have at least $1,000 in qualified business income
• Consult with a tax preparation New Haven professional to ensure proper calculation and documentation

The QBI deduction applies to pass-through entities including sole proprietorships, partnerships, S-corporations, and some trusts. This deduction can reduce your effective tax rate significantly. Failure to claim this deduction results in overpayment that cannot be recovered without filing an amended return.

Maximize Equipment and Asset Purchase Deductions!

Bonus depreciation has been fully restored for 2026. Business owners can now deduct 100% of the cost of qualifying assets placed in service after January 19, 2025.

Qualifying assets include:

• New and used equipment
• Machinery and tools
• Business vehicles (including heavy trucks, vans, and SUVs over 6,000 lbs when used more than 50% for business)
• Commercial real estate improvements
• Technology and computer systems

Section 179 expensing limits:

• Maximum deduction: $2.5 million for 2026
• Phase-out threshold indexed for inflation
• Applies to both new and used property

Action required: Review purchases made in late 2025 and early 2026. Document the business use percentage for vehicles and mixed-use assets. Maintain receipts, invoices, and proof of payment. Consider accelerating planned equipment purchases into early 2026 to maximize current depreciation rules.

Deduct Self-Employment Tax Correctly!

Self-employed business owners can deduct 50% of self-employment tax when calculating adjusted gross income. This deduction reduces both federal income tax and potentially state tax liability.

Calculation example:

• Net business income: $150,000
• Self-employment tax (approximately 15.3%): $22,950
• Deductible amount (50%): $11,475
• Tax savings at 24% bracket: approximately $2,754

Enter this deduction on Schedule 1 (Form 1040), line 15. This deduction applies automatically when you file Schedule SE. Verify that tax software or your tax preparer includes this calculation.

Review Your Business Entity Structure Now!

The elimination of the $10,000 SALT (state and local tax) deduction cap in 2026 significantly impacts Connecticut business owners who pay high state taxes. This change affects entity structure optimization.

Evaluation checklist:

• Assess current entity type: sole proprietorship, partnership, LLC, S-corporation, or C-corporation
• Calculate state tax burden under current structure
• Review Pass-Through Entity (PTE) Tax election status (Connecticut-specific)
• Determine if entity conversion or restructuring provides tax advantages
• Consult with a concierge tax pro familiar with Connecticut tax law

Entity structure changes must be completed with proper legal documentation and IRS notification. Some conversions trigger recognition of income or assets. Professional guidance prevents costly errors.

Claim All Routine Business Deductions!

Standard business deductions reduce taxable income when properly documented and categorized.

Home office deduction:

• Simplified method: $5 per square foot (maximum $1,500)
• Actual expense method: percentage of mortgage interest, utilities, insurance, repairs based on business use area
• Requires exclusive and regular business use of designated space

Vehicle expenses:

• Standard mileage rate: $0.70 per mile for 2025 (verify 2026 rate when published)
• Actual expense method: gas, maintenance, insurance, depreciation based on business use percentage
• Maintain mileage log with date, destination, business purpose, and miles driven

Health insurance premiums:

• 100% deductible for self-employed individuals
• Includes premiums for spouse and dependents
• Cannot exceed net business income
• Enter on Schedule 1 (Form 1040), line 17

Business meals:

• 50% deductible when with clients or business associates
• Document attendees, business purpose, date, location, and amount
• Personal meals are not deductible

Professional services:

• Accounting and bookkeeping fees
• Legal fees for business matters
• Consulting and advisory services
• Tax preparation New Haven services and professional guidance

Maximize Retirement Contributions!

Retirement contributions reduce current taxable income while building long-term savings. Contribution limits for 2026 allow substantial deductions.

Solo 401(k) limits:

• Employee deferral: up to $23,500 ($31,000 if age 50+, $34,750 if age 60-63)
• Employer profit-sharing: up to 25% of compensation
• Total combined limit: $70,000 ($77,500 if age 50+, $81,250 if age 60-63)

SEP-IRA limits:

• Contribution: up to 25% of net self-employment income
• Maximum: $70,000 for 2026

Action required: Establish retirement plans before year-end to claim contributions. Consider both traditional (pre-tax) and Roth (after-tax) options based on current and projected future tax rates. Consult a financial advisor to maximize tax refund potential through strategic retirement planning.

Don't Miss Available Tax Credits!

Tax credits provide dollar-for-dollar reduction of tax liability. Credits often deliver greater savings than deductions.

Research & Development (R&D) Tax Credit:

• Available for qualifying research activities
• Includes developing new products, processes, or software
• Requires detailed documentation of activities, personnel, and expenses
• Small businesses can offset payroll tax with R&D credit

Employee Retention Credit (ERC):

• Verify eligibility for remaining qualifying periods
• Maintain detailed recordkeeping for all claimed wages
• Document business disruption or government orders
• Be aware of IRS scrutiny and compliance requirements

Employer Childcare Credit:

• Tripled for 2026
• Provides support for small employers offering childcare benefits
• Includes childcare facilities and childcare resource/referral services

Connecticut-specific credits:

• Review state tax credit programs for manufacturing, technology, and green energy businesses
• Angel investor tax credits for qualifying investments
• Urban and industrial site reinvestment credits

Organize Your Records Immediately!

Proper recordkeeping supports deduction claims and protects against IRS audits. Missing documentation can result in disallowed deductions and additional tax liability.

Essential records to maintain:

• Bank statements and credit card statements showing business transactions
• Receipts and invoices for all deductible expenses
• Mileage logs with dates, destinations, and business purposes
• Home office measurements and utility bills
• Contracts, agreements, and official correspondence
• Payroll records if you have employees
• Form 1099-NEC and 1099-K from clients and payment platforms

Retention period: Maintain records for at least three years from filing date. Keep records for seven years if you claim losses or bad debt deductions.

Schedule Your Tax Preparation Now!

Professional tax preparation ensures accurate filing and maximizes available deductions. A concierge tax pro provides personalized guidance that generic software cannot replicate.

Benefits of professional tax preparation New Haven services:

• Expert knowledge of Connecticut and federal tax law
• Identification of overlooked deductions and credits
• Accurate calculation of complex provisions like QBI deduction
• Representation if IRS questions arise
• Year-round planning to optimize future tax positions

File your return before April 15, 2026 to avoid penalties and interest. Extensions provide additional filing time but do not extend payment deadlines. Underpayment of estimated taxes throughout 2026 may result in penalties even when filing on time.

Don't leave money on the table. Use this checklist to maximize your 2026 tax position and ensure compliance with all federal and Connecticut requirements. Contact Jose's Tax Service for professional tax preparation and planning guidance tailored to your New Haven small business.