Top 10 Tax Planning Strategies for 2026

Businesses are approaching the end of the first quarter of 2026 with a familiar feeling: the rules are still shifting, the economy is still sending mixed signals, and “wait and see” is no longer a viable strategy. 

A major driver of action is the One Big Beautiful Bill Act (OBBBA), which teed up important changes that are now live for 2026 and are already reshaping how businesses think about tax planning. At the same time, the broader business backdrop is giving those rule changes extra bite. Borrowing costs remain a meaningful factor in deal modeling and cash-flow planning, and the Federal Reserve has been clear that policy will be calibrated carefully as inflation cools and growth normalizes. 

In a market that’s hungry for certainty, businesses need tax planning strategies that offer clear and immediate value. Fortunately, favorable guidance, new court decisions, and legislative changes are creating meaningful planning opportunities across nearly every business type and industry. Whether your company is focused on cash tax savings, an effective tax rate, owner taxes, or M&A activity, there are planning options that fit your profile. See below our top 10 tax planning strategies for 2026, including opportunities for taxpayers losing charitable deductions, struggling with tariffs, recovering research costs, seeking tax-efficient M&A structures, operating across borders, facing self-employment tax, or looking for credit opportunities to offset tax liabilities. 

Corporate Charitable Deductions

Proactive planning might spare many corporations from losing valuable deductions under a change made by the OBBBA. Beginning in 2026, corporations will be able to deduct charitable gifts only to the extent they exceed 1% of adjusted gross income (AGI). Unless the gifts also exceed the 10% AGI cap on the corporate charitable deduction, the amount disallowed by the 1% floor will not be carried forward and will be permanently lost. If the payments align with business objectives, however, there may be an opportunity to claim them as business expenses under Section 162. 

The IRS and the courts have provided extensive guidance on when payments to charities are properly deductible as charitable gifts or business expenses. IRS regulations generally provide that a gift is deductible as a business expense if there is a direct correlation with the taxpayer’s trade or business and there is a “reasonable expectation” that the gift will result in a financial benefit of equal or greater value to the business. 

This financial return could be as simple as “goodwill” advertising to keep the taxpayer’s name before the public, such as a sponsorship or giving program that is advertised as part of a marketing campaign. Contributions may also qualify if they are made to strengthen customer relationships, improve general business conditions, attract and retain employees, or satisfy regulatory or licensing obligations. 

The analysis required to determine how a payment to a charity is deducted is very fact-specific, and corporations should carefully compare the existing guidance to their own gifting programs. Taxpayers have lost business deductions when they couldn’t sufficiently demonstrate an expected business return, so it will be important to contemporaneously document the business purpose, the expected return, and how the program will achieve it.

Research Capitalization

Be careful what you wish for. The business community spent years advocating for lawmakers to reverse legislation that required businesses to capitalize research and experimentation (R&E) costs for tax years beginning after 2021 and ending before 2025. Now that the OBBBA has restored taxpayers’ ability to expense domestic R&E costs, many businesses are realizing capitalization still offers them a better result. 

There are several reasons a company may benefit from capitalization, including the increased ability to use tax credits or other tax attributes. Highly leveraged businesses should consider the interaction between R&E cost recovery and the limit on the interest deduction under Section 163(j). Capitalized costs will not reduce adjusted taxable income for purposes of the Section 163(j) calculation, potentially allowing businesses to deduct more interest. Multinationals and exporters should also consider the potential impact of R&E expensing on international calculations such as the foreign-derived deduction eligible income and the base erosion and anti-abuse tax (BEAT).

The complex interactions between provisions make modeling the key to identifying beneficial strategies. Taxpayers will generally have two options to capitalize domestic R&E costs: amortizing the costs over a minimum of 60 months under Section 174A or making an election under Section 59(e) to amortize over 10 years. The two options potentially have different starting points and scopes. There are also multiple options for how to treat unused R&E amortization deductions from 2022 through 2024. Regardless of method, every taxpayer will generally need to make a proactive election, method change, or statement on the 2025 return. See our procedural guidance on OBBBA treatment of R&E expenditures for more information on the legislative changes and initial guidance.

Tariff Refunds: Before and After

The Supreme Court’s decision striking down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) is not the end of the tariff story -- it is the beginning of a new chapter.  The Trump administration has made it clear that tariffs will remain a central trade policy tool.  It has already implemented a 10% worldwide tariff under Section 122 of the Trade Act of 1974 and is openly considering increasing the rate to 15%.

Although Section 122 tariffs can remain in place only for 150 days, the administration is simultaneously pursuing investigations to support additional long-term tariff measures under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974.  Existing Section 232 and Section 301 tariffs also remain fully in effect, as do all antidumping and countervailing duties.

Given the environment, companies should not only prepare to file IEEPA-related refund claims, but should also actively pursue mitigation and refund strategies for the ongoing tariffs.  Many importers can take advantage of several opportunities, including:

• Duty Drawback: Companies may be eligible to recover up to 99% of duties, taxes, and fees paid on imported goods that are later exported, unused, destroyed, or incorporated into exported products.  Comprehensive import, export, and production data reviews can uncover significant refund opportunities.
• First Sale Rule: Importers may be able to declare transaction value based on the earliest sale in a multitier supply chain.  Even companies with a single-sale structure may consider establishing a trading entity or intermediary to take advantage of first-sale valuation.
• Cost Unbundling: Companies should evaluate whether specific cost elements --such as certain management services fees, exclusive distribution rights fees, bona fide buying commissions, and certain U.S.-based R&D costs -- can be excluded from customs value.  

U.S. Customs and Border Protection (CBP) has informed the Court of International Trade that the agency cannot process IEEPA refunds through standard liquidation due to the volume of entries, and it is building new Automated Commercial Environment (ACE) functionality to automate refunds.  CBP expects this ACE refund system to be ready in about 45 days. Companies should prepare now by:

• Collecting relevant entry data from ACE. 
• Identifying entries that paid duties under the IEEPA. 
• Preparing to receive refunds electronically, which CBP has stated is required for processing. 
• Monitoring continued updates from the courts and the agency as the refund process launches.

Tariff policy continues to evolve rapidly.  Companies should stay informed and align their compliance and refund strategies with the changing regulatory environment. For more information, see BDO’s discussion of the Supreme Court decision and White House response, an FAQ on IEEPA tariffs, and the latest court rulings on refund procedures.

Self-Employment Tax Refunds 

Ongoing litigation may provide an opening for some partners to claim refunds for self-employment (SE) tax, particularly in the fund space. Partners are generally subject to SE tax on partnership income unless a specific exception applies. The exception for limited partners in a limited partnership has been the subject of controversy for many years.

Several Tax Court decisions ruled that the determination of who qualifies as a “limited partner” hinges on a functional analysis of a partner’s activities, regardless of whether the partnership is organized as a limited partnership (LP), limited liability partnership (LLP), or limited liability company (LLC). The Fifth Circuit Court of Appeals recently reversed the Tax Court decision in Sirius Solutions L.L.L.P. v. Commissioner, holding that limited liability alone is enough to establish a limited partner in an LP is exempt from SE tax.

The Fifth Circuit covers taxpayers in Texas, Louisiana, and Mississippi, but the decision could have broader implications. Limited partners in those states may have immediate refund opportunities if their income from an LP was previously subject to SE tax. While the decision doesn’t explicitly address taxpayers in other types of partnership entities, the court’s reasoning suggests partners of LLPs and members of LLCs may also benefit from the exception. In addition, two other cases remain pending – one in the First Circuit (Denham) and the other in the Second Circuit (Soroban). Given the ongoing uncertainty, limited partners in LP structures in any jurisdiction may be able to take a position that their income from those entities is exempt from SE tax.

The issue can be highly fact specific. Partnerships that have not looked closely at this area in recent years should reassess their position, which could help address risk or uncover a tax savings opportunity. See our discussion of the Sirius case for more information.  

Qualified Small Business Stock

The OBBBA significantly enhanced a tax-efficient structuring option for private companies. Qualified small business stock (QSBS) under Section 1202 offers the potential for tax-free appreciation and has become an increasingly attractive option for private equity.

Section 1202 generally allows non-corporate taxpayers to exclude 100% of the gain on QSBS stock held for five years, up to stated limits. For stock issued after July 4, 2025, the OBBBA also allows a 50% exclusion for stock held for at least three years and 75% for stock held at least four years. The OBBBA increased the maximum amount of gain that can be excluded from $10 million to $15 million (taxpayers can still exclude 10 times basis, if greater). In addition, the OBBBA raised the maximum amount of gross assets the qualified small business is allowed to hold before and immediately after the time of issuance from $50 million to $75 million. 

QSBS offers a powerful tax savings opportunity for the right type of acquisition at the right size, and the OBBBA changes make the structure even more flexible and accessible, particularly for private equity. Section 1202 imposes important restrictions on business activity and asset use. Taxpayers pursuing Section 1202 as a planning opportunity should track and document compliance with the asset and business tests, as well as other Section 1202 requirements. Our article Qualified Small Business Stock: Planning for Founders and Early Investors has more details. 

Foreign Tax Credit Planning

The evolving foreign tax credit (FTC) rules have made FTC planning both more challenging and beneficial. The FTC rules were modernized in final regulations published in 2021 and then partially “undone” via temporary relief in 2023. This relief remains available until guidance rescinding it is issued. The OBBBA complicates the picture further with changes to the allocation of expenses for FTC purposes and changes to the FTC haircut under the net CFC tested income (NCTI) calculation. The OBBBA also changes the source rules for inventory produced in the U.S. and sold through a foreign office.

Multinational taxpayers should give their FTC planning a fresh look under the new allocation and haircut rules, keeping in mind the potential flexibility under the 2021 regulations and temporary relief. There are likely opportunities to manage FTC “baskets” so that taxes paid in high-tax jurisdictions are appropriately assigned to categories that best leverage their usage. This type of planning can involve many tax regimes across multiple jurisdictions and categories. A modeling tool can help identify inefficiencies and unlock favorable strategies.

Pillar Two Planning

The creation of a side-by-side system exempting U.S. multinationals from key aspects of Pillar Two does not mark the end of Pillar Two as a concern for U.S. companies. On the contrary, the agreement creates a more permanent structure for the Pillar Two regime. Taxpayers that were sitting on the sidelines waiting for a resolution to the evolving negotiations should now begin planning with more certainty.

Pillar Two will continue to affect U.S. multinationals in several ways. The side-by-side system will not take effect retroactively, meaning companies will have to fulfill their obligations under the rules and safe harbors in place for 2024 and 2025. In addition, companies may not be able to account for the benefits of the side-by-side safe harbors for financial statement purposes until jurisdictions actually implement the new rules under local law. U.S. multinationals will also have to contend with qualified domestic minimum top-up taxes (QDMTTs) in many of the jurisdictions in which they have controlled foreign corporations (CFCs).

The good news is that the side-by-side system may open planning opportunities to U.S. multinationals that are not available to companies headquartered in countries fully subject to Pillar Two. The minimum tax rules under the NCTI provisions and the BEAT operate differently than the income inclusion rule (IIR) and the undertaxed profit rule (UTPR). Importantly, NCTI does not apply on a country-by-country basis, potentially providing opportunities to shift income from high-tax jurisdictions to low-tax jurisdictions. Like all international planning, the NCTI calculation can be complex and require modeling. For more information on the implications of the new Pillar Two safe harbors, see OECD Side-By-Side Package Secures Future of Pillar Two.

Leveraging and Buying Tax Credits

The recent legislative changes to energy tax credits were not as sweeping as some taxpayers originally feared. While the OBBBA will phase out a number of credits over the next several years, many remain available for near-term and long-term projects. It will be important for companies pursuing energy projects to understand when the differing sets of rules take effect and document compliance with new requirements. 

More importantly, the OBBBA preserves taxpayers’ ability to buy and sell tax credits. The tax credit market remains robust and offers a powerful arbitrage opportunity to reduce tax payments. The strategy is not without risk. The buyer steps into the shoes of the seller for many tax rules’ purposes. Indemnification clauses, due diligence, and tax insurance can help manage risk, unlocking significant savings for taxpayers with large tax liabilities. Credits are offered at a range of prices, depending on the size and type of credit. Brokers and tax advisors can help navigate transactions, document credits, and calculate the impact on the return. Learn more about how the transfer market is evolving under the OBBBA.

Qualified Opportunity Zones

The OBBBA made the qualified opportunity zone (QOZ) program permanent, preserving one of the most generous tax incentives ever created by Congress. The provision can offer benefits to investors looking for tax-efficient returns, individual companies operating in specific geographies, or asset managers setting up funds.

Taxpayers can defer capital gains by investing in a qualified opportunity fund (QOF). For investments made after 2026, taxpayers will be required to recognize the deferred gain five years after making the investment, but will receive a 10% increase in basis for holding the investment five years. For QOFs operating in a new category of rural opportunity zones, this basis increase is 30%. 

The more powerful tax benefit may be the tax-free appreciation of the underlying investment itself. Taxpayers receive a full basis step-up to fair market value (FMV) for property held 10 years, but the OBBBA added a rule freezing the basis step-up to FMV at 30 years after the date of the investment. 

Taxpayers already holding QOF investments should consider planning now to manage the effect of mandatory recognition of deferred gain at the end of 2026. There may be opportunities to mitigate the impact by harvesting capital losses, performing cost segregation studies of QOF buildings and assets, deducting suspended losses, or substantiating a reduced FMV for the QOF investment. There may also be opportunities to trigger gain before the recognition date and re-defer that gain into another QOF investment in 2027 to be eligible for five additional years of deferral and a basis increase of up to 10%. For more information, see Managing 2026 Income Taxes on Qualified Opportunity Zone Fund Investments.

Elevate the Tax Function

To execute on any proactive tax planning option, the tax function must be involved in business decisions and operate efficiently. Elevating tax’s visibility across the organization should be a top priority. Tax leaders need to have a seat at the table, working closely with IT, finance, and other business functions to be a part of a company’s digital transformation initiatives as well as broader decision-making processes.

But elevating the tax function can put additional strain on a department that may already be stretched thin by sweeping tax law changes, tariff uncertainty, and business developments. Tax leaders should be intentional about where they deploy internal resources and where they bring in external support. There are also significant opportunities to use emerging technologies to improve efficiency.

AI is a hot topic, but many companies struggle to realize its potential benefits. Data management and quality issues can hinder successful AI adoption. Tax leaders should consider focusing on low-lift, high-impact opportunities, such as leveraging existing software licenses and capabilities. The tax function should collaborate with internal teams across the business, including IT, and establish a data hygiene roadmap to support downstream AI tools. Early “quick wins” can help demonstrate value and build organizational trust. Learn more from a recent conversation on building a future-ready tax function with BDO CEO-elect Matt Becker.