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Year-end planning isn’t just about compliance. It’s about creating an opportunity to keep more of what you’ve built and position your business for what’s next.
As new tax provisions under the “One Big Beautiful Bill Act” (OBBBA) take effect, private companies have a limited window to turn these changes into advantage. From recovering more on recent capital investments, to rethinking how interest deductions and R&D spending affect cash flow, to exploring new ways to transfer ownership or wealth more efficiently—the right planning now can strengthen your position heading into 2026, so you can move forward with confidence and flexibility. Because state conformity to federal law varies widely, you’ll want to evaluate where state rules may dilute, delay, or magnify the benefits you expect—and where credits and incentives can add incremental value.
The new tax rules make this a pivotal year to revisit your strategy. This guide highlights five ways to turn tax complexity into advantage. Use it to focus your tax planning conversations, align your next steps, and accelerate outcomes across your business and personal goals.
Move 1: Use bonus depreciation to free up capital
Learn how expanded bonus depreciation rules could reshape your capital investment strategy.
Changes made by OBBBA include an unprecedented opportunity for companies to claim immediate deductions for property that would otherwise be depreciated over 39 years and new transition percentages that provide additional options to recover your capital expenditures. Timing and classification of property acquisitions dramatically affect depreciation deductions, and engineering studies and asset mapping can help identify eligible property and mitigate recapture risk. If you’re planning to expand facilities, modernize equipment, or invest in new technology, these provisions could help you deduct more of those investments upfront, leading to lower taxable income and stronger cash flow heading into 2026.
Why it matters
The updated rules may give private companies an opportunity to improve near-term cash flow and free up capital for other priorities. If you’re planning to upgrade facilities or make new investments, understanding how and when assets are placed in service can make a meaningful difference in your tax position—especially since state‑by‑state conformity and recapture rules can change the math. Additionally, downstream impacts from large bonus depreciation deductions could create or increase net operating losses (NOLs) subject to the 80% limitation or trigger the excess business loss limitation for individuals.
What to review:
- Confirm acquisition and placed-in-service dates to identify property that qualifies for bonus depreciation
- Evaluate cost segregation and component-level analyses to identify additional deductions
- Review how bonus depreciation interacts with the Section 163(j) limitation to enhance tax-efficiency
- Assess state conformity to bonus depreciation provisions
Who should take a closer look:
Private companies making significant capital investments—from manufacturers to refiners—or those expanding facilities and upgrading assets may want to revisit their capital strategy for 2026.
Questions to discuss with your tax advisor:
- What bonus depreciation elections will improve our 2025 cash flow?
- What are the benefits of a component-level analysis?
- What happens if bonus depreciation eliminates taxable income?
As you refine your capital investment approach, it’s also important to evaluate how financing decisions shape your overall tax position.
Move 2: Revisit financing to improve cash flow
Learn how the new Section 163(j) ordering rule and permanent addback can affect how you manage interest deductions and financing decisions.
With the permanent reinstatement of the depreciation, amortization, and depletion (DAD) addback and the new ordering rule for interest capitalization taking effect, elective or mandatory capitalization provisions can help you increase deductions for interest expense. For companies with higher debt or rising interest costs, these changes can have a meaningful impact on after-tax cash flow and how you structure financing for growth.
Why it matters
Changes to the interest deduction limitation can alter how you model financing costs and evaluate new debt or capital investments. For 2025, elective capitalization of interest remains available to reduce the impact of the deduction limitation. However, don’t overlook the same benefit from mandatory interest capitalization rules, and the potential to file method changes to capitalize interest in prior years. Likewise, you can increase interest expense deductions with other capitalization elections and use bonus depreciation to deduct the capitalized amounts. Like bonus depreciation, a myriad of different state rules (grouping, separate‑company limits, thresholds) create significant complexity, while larger interest expense deductions could generate losses that are subject to the 80% limitation on the deductibility of NOLs under Section 172 or the excess business loss limitation of Section 461(l).
What to review:
- Recompute the Section 163(j) limitation in determining taxable income for 2025 and projections for 2026 and future years
- Evaluate how the capitalization of interest expense or other costs affects taxable income
- Map state conformity to Section 163(j) to identify where limitations could create permanent state tax costs
Who should take a closer look:
Highly leveraged or private equity–owned entities—along with businesses carrying forward disallowed interest—may benefit from reassessing their financing and capitalization strategies under the new limitation rules.
Questions to discuss with your tax advisor:
- How does capitalization affect the deductible amount of interest expense?
- Are there any exceptions to the new ordering rules that apply to capitalized interest expense?
- What are state limitations on the deductibility of interest expense in the states where we operate?
Just as physical assets require careful timing and planning, investments in innovation deserve equal attention — especially as new rules reshape how research and experimental (R&E) costs are treated.
Move 3: Review R&D spending to fund more innovation
Learn how Section 174A changes the way you treat R&E costs — and what that means for your tax strategy and cash flow planning.
New rules under Sections 174 and 174A change how companies treat domestic R&E costs—whether they’re immediately expensed or amortized over time. The approach you choose can have a meaningful impact on taxable income, Corporate Alternative Minimum Tax (CAMT) exposure, and the timing of future deductions. For CFOs, these changes are more than accounting updates — they directly affect how you plan, fund, and measure innovation. And like deductions for interest expense, state treatment of R&E often differs materially, making it critical to incorporate state income tax projections into your models.
Why it matters
The new options for the treatment of R&E expenditures changes not only the timing of when you realize tax benefits from research activities but also potentially your effective tax rate. Decisions about when and how to fund innovation affect your federal and state income tax liabilities, cash position, and investment capacity. Large deductions claimed on research activities can produce NOL carryovers that are subject to the 80% cap or the excess business loss limitation of Section 461(l).
What to review :
- Evaluate the options to accelerate the recovery of costs capitalized before 2025
- Incorporate expensing versus amortization scenarios into your models—including potential Section 59(e) elections—to enhance deductions
- Forecast cash flow and attribute usage to understand downstream impacts and identify planning opportunities
Who should take a closer look:
Companies with domestic R&E expenditures—and those looking to reduce their exposure to the CAMT—may want to revisit how they’re treating R&E costs before year-end.
Questions to discuss with your tax advisor:
- Which Section 174/174A approach aligns with our 2025 cash flow planning?
- Are retroactive options available for small taxpayers?
- How does our R&E treatment affect other tax attributes and state conformity?
After addressing how your business invests and innovates, the next opportunity lies in how you manage what you’ve built—your ownership, equity, and long-term value.
Move 4: Reimagine ownership to preserve wealth
Learn how Section 1202 (Qualified Small Business Stock) can unlock new opportunities to enhance ownership value and after-tax outcomes.
Recent updates to Section 1202 expand the potential for founders, investors, and owners of eligible C corporations to exclude gains from qualified stock sales for stock acquired after July 4, 2025. These enhancements include higher lifetime limits, tiered exclusions, and expanded eligibility thresholds, offering a timely opportunity to align ownership and exit strategies for greater after-tax efficiency. For private company leaders, these changes open new possibilities to preserve wealth, support succession planning, and strengthen your long-term financial strategy.
Why it matters
Section 1202 provides a powerful tax incentive for owners and investors in qualifying C corporations. Understanding how the updated thresholds and timelines apply to your holdings can help you plan equity transactions, recapitalizations, or exits more strategically — so you can capture more of the value you’ve built over time
What to review:
- Confirm eligibility and gross-asset thresholds for stock acquired after July 4, 2025 to evaluate compliance with Qualified Small Business Stock (QSBS) requirements
- Review stock acquisition and holding periods to validate qualification timing, as different rules apply to stock acquired on or before July 4, 2025 and stock acquired after
- Integrate QSBS considerations into exit or succession planning to enhance potential exclusions
Who should take a closer look:
Founders, owners, and investors in domestic C corporations—especially those planning a sale, recapitalization, or secondary transaction—should consider how QSBS treatment fits into their broader exit and wealth strategies.
Questions to discuss with your tax advisor:
- Do our holdings acquired after July 4, 2025 meet the updated QSBS requirements and thresholds?
- For stock acquired after July 4, 2025, what’s the potential exclusion amount under the new limits?
- What is the potential exclusion amount under the old limits for stock acquired on or before July 4, 2025?
- How can we align QSBS benefits with our ownership or exit strategy?
For many private company owners, planning extends beyond the business itself. Thoughtful philanthropy can turn personal values into lasting impact, while also enhancing tax-efficiency.
Move 5: Make giving part of your legacy strategy
Learn how upcoming Section 170 charitable deduction limits could influence your giving strategy and timing before 2026.
Beginning in 2026, a new 0.5% floor on charitable deductions for individuals and a 1% floor for corporations becomes effective. In addition, a new limitation on itemized deductions will reduce itemized deductions for some individual taxpayers, decreasing the maximum tax benefit of those itemized deductions to 35%, down from 37% under current law. Planning gifts now and selecting the right giving vehicles—such as donor-advised funds (DAFs), charitable trusts, or private foundations—can help enhance both impact and tax-efficiency. By planning gifts now—and selecting the right giving vehicles—you can preserve more of your deduction value while advancing your philanthropic goals.
Why it matters
Philanthropy is a meaningful way to extend your impact beyond your business—and with new rules ahead, timing and structure are key. Planning gifts before the 2026 changes can help you maximize deduction value, enhance liquidity planning, and ensure your giving aligns with your family’s or company’s purpose.
What to review before year-end:
- Evaluate DAFs, charitable trusts, and private foundations to determine appropriate vehicles for your giving strategy
- Consider the interaction between gift timing and income or liquidity events to capture more deduction value
- Assess Adjusted Gross Income (AGI) and state-level deduction effects to understand the full tax impact of planned contributions
Who should take a closer look:
Families and business owners with philanthropic goals—along with donors anticipating a high-income year or planning significant gifts—may want to act now to make the most of current charitable deduction rules before new limits take effect.
Questions to discuss with your tax advisor:
- Which giving vehicles match our goals and governance?
- What’s the ideal timing to capture full deduction value?
- Are certain charitable vehicles more tax-efficient for non-cash gifts (i.e., donations of private company stock to a DAF versus a private, non-operating foundation)?
- How do state rules affect our total benefit?
Together, these five moves show how proactive planning creates flexibility and lasting value well beyond this tax cycle.
Beyond the five moves: Anticipate downstream effects and state variability
These decisions are interconnected. Federal elections on depreciation, interest, and R&E can ripple through other areas, including CAMT, usage of net operating losses and credits, foreign income calculations, and state tax bases. Critically, the Section 172 80% limitation can cap how much NOL you can use in profitable years—shifting cash tax savings into the future—even when current-year deductions are large. For individuals, Section 461(l) can further restrict current-year loss utilization. Some states are already adjusting to OBBBA in different ways—for example, treating certain foreign income items differently or decoupling from specific federal expensing provisions. The takeaway: model the full picture—federal and state, entity and owner—before you lock in elections.
Next Steps
Complexity creates opportunity for those who plan ahead.
Each of these moves can strengthen your company’s financial agility and long-term success. Now’s the time to look at how these changes affect your business, your ownership structure, and your next big decision.
Talk with your PwC Private Tax team to identify where you can capture the full benefit—so you can close the year strong and build the momentum that carries you into what’s next.
A must-have guide to making informed decisions for your financial future
PwC’s 2026 guide to tax and wealth planning
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