2027 Tax Changes and OBBBA: A Fourth Quarter Planning Guide
The extended filing deadline has passed, and for many business owners and families that feels like the finish line. It is closer to halftime. The 2025 return is filed, but the 2026 tax year is still open, the 2027 rules are being set right now, and the IRS systems that review every year never stopped running.
Tax compliance is not a once-a-year event. Payers file information returns, the IRS matches them against what you reported, notices go out on a schedule, and the window for current year planning closes on December 31 whether anyone acts or not. The fourth quarter is where those cycles overlap.
Why the Fourth Quarter Matters More Now
Each fall the IRS publishes a revenue procedure with the inflation adjusted amounts for the coming year, including tax brackets, the standard deduction, and dozens of other thresholds. The agency listed the 2027 release as an October item in its 2026 to 2027 Priority Guidance Plan, and the results will appear on its page of inflation adjusted tax items by tax year. As of mid-October, the full set of 2027 figures had not been released. [irs]
Some 2027 amounts are already final. The IRS has set the 2027 health savings account limits at $4,500 for self-only coverage and $9,000 for family coverage. For the rest, professional estimates give a reliable preview. Thomson Reuters Checkpoint projects a 2027 standard deduction of $33,200 for married couples filing jointly and $16,600 for single filers, up from $32,200 and $16,100 for 2026, with the child tax credit projected at $2,300 per child. Those numbers remain estimates until the IRS publishes, but they are close enough to plan around. [irs]
The 2027 year also carries changes from the One Big Beautiful Bill Act. Several of its provisions were written to begin, or to start adjusting for inflation, in 2027.
Tax problems are easier to manage before the IRS process controls the timeline. If you want a practical review of how the 2027 changes affect your exposure, your planning options, or any IRS correspondence already sitting on your desk, speak with Steve Perry, EA. Call 678-717-9818, email [email protected], or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
The Assumption That Costs Options
Many taxpayers believe that once a return is filed, the year is closed until the next filing season. The IRS system does not work that way.
After a return posts, it moves into automated matching. The IRS compares the income on your return with Forms W-2, 1099, and other information returns filed by employers, banks, and businesses. When the numbers do not line up, the Automated Underreporter program can issue a CP2000 notice proposing changes, often many months after filing. The response window is about 30 days. A taxpayer who ignores the notice does not stop the process; the IRS moves to a statutory notice of deficiency on its own timeline. [irs]
The same logic applies to planning. Most year-end decisions, such as when equipment is placed in service, how much goes into retirement or health accounts, and when gifts or charitable contributions are made, must be completed by December 31. After that date, the return can only report what already happened. Think of it like a final exam. You can review your answers until the bell rings, but once you hand in the paper, the grade reflects what is on the page.
Outcomes today differ from the past because the IRS sees more and sees it sooner. Expanded information reporting, electronic filing of information returns, and automated matching mean discrepancies surface without an examiner ever choosing your file. Visibility is now the default.
OBBBA Provisions That Change in 2027
Not every provision matters to every reader, but several start or begin adjusting with the 2027 year:
Form 1099 reporting threshold. The threshold for Forms 1099-NEC and 1099-MISC rose from $600 to $2,000 for payments made in 2026, and IRS Publication 1099 confirms it will be adjusted for inflation beginning in calendar year 2027. [irs]
Estate and gift exclusion. The basic exclusion amount is $15,000,000 for 2026, and Rev. Proc. 2025-32 states it will be adjusted for inflation for 2027 and later years. [irs]
State and local tax deduction. The cap is $40,400 for 2026 and rises 1 percent to $40,804 for 2027, with the phase down beginning above $510,050 of modified adjusted gross income, according to Charles Schwab. [schwab]
Scholarship tax credit. A new nonrefundable credit of up to $1,700 for cash contributions to qualified scholarship granting organizations begins January 1, 2027, and depends on the taxpayer's state opting in. [kpmg]
Opportunity Zones. The program is now permanent, with new zone designations and a rolling five-year deferral for investments made after December 31, 2026 [winthrop]
There may be other items depending on the facts and circumstances, including the temporary deductions for tips, overtime, car loan interest, and taxpayers age 65 and older, which remain available through 2028.
How Each Change Connects to IRS Matching
The 1099 threshold affects both sides of a payment. A business that pays contractors needs to know which payees require a form for 2027, because the threshold will no longer be a round number. A contractor who receives fewer forms still owes tax on every dollar earned, and their own books carry more of the burden if the IRS later questions deposits.
The SALT cap and its phase down create a planning zone for higher income households. Above the threshold, the cap shrinks by 30 cents for every dollar of extra income until it reaches $10,000. Timing a bonus, a capital gain, or a property tax payment can move a household in or out of that zone, but only before the year closes.
Estate exclusion indexing matters to families who have made or plan large gifts. Gifts above the annual exclusion generally require a gift tax return, and the IRS tracks lifetime use of the exclusion through those filings. A missing gift tax return is a recordkeeping gap that grows harder to fix with time.
The scholarship credit and Opportunity Zone rules both reward preparation. The credit depends on the state participating and the organization qualifying. Opportunity Zone investments depend on timing windows tied to when a gain is realized. Neither works well when discovered at filing time.
Before assuming your tax position is settled for the year, consider having Steve Perry, EA evaluate your records, IRS risk, and planning opportunities under the rules taking effect in 2027. Call 678-717-9818, email [email protected], or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
A Worked Example: The Equipment Purchase
Consider a landscaping company owner planning to buy a $120,000 piece of equipment. Under the new law, the 100 percent first year depreciation deduction is permanent for qualified property acquired after January 19, 2025, as the IRS explained when it released Notice 2026-11. [irs]
Because the full deduction no longer shrinks each year, the question is which year the deduction belongs in and whether the records will support it.
If the equipment is delivered, set up, and ready for use by December 31, 2026, the deduction generally belongs on the 2026 return. If it arrives on January 5, 2027, it belongs on the 2027 return, even if it was paid for in December. The IRS looks at when property is placed in service, not when the check cleared.
Assume the owner expects 2026 to be a strong year and 2027 to be slower. Claiming the $120,000 deduction in 2026 may offset income taxed at a 32 percent federal rate, worth roughly $38,400 in federal income tax. In a lower 2027 bracket, the same deduction is worth less; if 2027 looks stronger, waiting may make sense. State rules may not follow federal treatment, so the state result should be checked separately.
The documentation is what protects the deduction:
Purchase agreement and invoice showing the acquisition date
Delivery receipt and setup records showing when the asset was ready for use
Evidence of business use, especially for vehicles
Financing documents if the equipment was not paid for in cash
Fixed asset records that match the depreciation schedule on the return
Other records may be needed depending on the facts and circumstances. Rebuilding that file two years later, after the IRS asks, is far harder than keeping it now.
What Happens When Taxpayers Wait
Options narrow in a predictable order. Planning decisions expire on December 31. Estimated tax due dates pass, and underpayment penalties are figured from when the tax was due, not when the return was filed. Information returns arrive early in the year, and any mismatch waits in the matching system until a notice goes out. Once a notice arrives, response deadlines replace planning choices. If a balance goes unpaid, the IRS moves through a notice sequence that can end in collection action.
Each step is easier to manage at the stage before it. A taxpayer who reviews 2026 income in November can still adjust the fourth quarter estimated payment. One who waits for a balance due notice can only choose among payment options.
If IRS notices, unpaid balances, missing records, or planning gaps are already creating concern, speak with Steve Perry, EA before the problem becomes harder to control. Call 678-717-9818, email [email protected], or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
A Fourth Quarter Planning Framework
A practical review before year end covers five areas:
Project 2026 income against the 2026 brackets and compare it with expected 2027 income under the projected adjustments
Confirm estimated payments and withholding are on track before the January 15, 2027 payment date
Decide the timing of equipment purchases, retirement contributions, and charitable gifts
Update contractor files and Forms W-9 before 1099 season
Review any IRS correspondence received this year and confirm each item is closed
There may be other steps depending on the facts and circumstances, such as gift planning for families near the exclusion amount.
Planning Continues All Year
The 2027 inflation adjustments and the OBBBA provisions taking effect are a reminder that the tax system runs on a calendar that does not pause after filing season. Many IRS issues do not begin with a filing mistake. They begin with what happens after the return is filed, after a notice arrives, or after a planning opportunity becomes visible and no one acts on it.
Good tax outcomes come from managing the year before the IRS forces the issue. For help reviewing your 2026 year-end decisions and building your 2027 plan while every option is still open, speak with Steve Perry, EA. Call 678-717-9818, email [email protected], or connect on LinkedIn at www.linkedin.com/in/steveperrybtm.
Frequently Asked Questions
When will the IRS release the official 2027 inflation adjustments?
The IRS scheduled the 2027 revenue procedure as an October 2026 item. Until then, planning relies on professional estimates.
Do the 2027 adjustments apply to the return I file in 2027?
No. The return filed in early 2027 covers tax year 2026 and uses 2026 amounts. The 2027 figures apply to income earned during 2027, reported on the return filed in 2028.
If I receive fewer 1099 forms, do I report less income?
No. All business income is reportable whether or not a form is issued. Good records are your support if IRS matching later questions deposits or receipts.
Is there still a reason to buy equipment before December 31?
The full first year deduction is now permanent, so the reason to act is matching the deduction to the year it does the most good, not beating an expiring percentage.
What should I do if I received an IRS notice this year?
Read the notice and contact Steve Perry at Books, Taxes & More for assistance. A professional review can confirm whether the IRS proposal is correct before you agree to it.
