For most companies, the fourth quarter is the final window to make capital decisions, which will determine how you move into the next cycle. For profitable companies, this moment could be monumental. That’s because interest and loan fees associated with strategic capital use are tax-deductible – meaning smart capital deployment now can reduce taxable income and, in some cases, even move you into a lower tax bracket.
At National, we often remind clients that some of the most leveraged upgrades are the ones you deduct this year and deploy next year. Whether it’s investing in equipment, building new capabilities or locking in prices ahead of January’s interest rate hikes, these are moves by businesses that understand how timing compounds value.
We’ve outlined 7 year-end capital investment strategies we’ve seen firsthand in a variety of industries, from construction to manufacturing to wholesale. These are not tax gimmicks or “spend it or lose it” strategies. They are smart decisions based on how real businesses grow, how they take advantage of opportunities, and whatever else is left to them before the calendar turns.
1. Upgrade equipment before discontinuation of production
Need a new forklift, production line component, or addition to your fleet? If you purchase or upgrade qualified equipment before the end of the year, Section 179 and bonus depreciation may allow you to deduct up to 100% of the cost during the tax year. But only if the equipment is purchased and deployed before December 31st.
This is especially valuable in industries like manufacturing and construction, where upgrades are typically scheduled for the spring, but buying now allows you to minimize deductions and start using the equipment you need in the first quarter. One of our manufacturing customers recently postponed first quarter equipment purchases until December. Their CPA confirmed they could write off the entire cost under Section 179, saving six figures in taxable income. Please consult your accountant to confirm eligibility.
2. Modernization of internal systems
System upgrade is not only an IT upgrade, but also a power upgrade. When your tools fall behind, your people fall behind. Upgrading internal platforms, hardware or software now can remove hidden friction in daily work, especially in high-volume or multi-site operations. We’ve helped clients transform everything from routing tools to warehouse dashboards and internal communications platforms to increase productivity without adding staff.
We made this decision ourselves during the quarter to launch new laptops across the company to avoid carrying outdated equipment into the new year while taking advantage of the tax benefits.
3. Leverage flexible capital to nurture ideas
Some of the best ideas in business never come to fruition because there’s no space to test them. Flex Line can change that. We’ve seen clients use it to create micro-budgets in order to prototype new training programs, workflows and even supplier strategies No Requires full deployment or long-term expenditure.
One client piloted a revised employee onboarding model using Flex Line, which has now been expanded to multiple sites. Small bets like this reveal what’s worth scaling without slowing down the business to find out.
4. Invest in culture and team
In a business where every project, route, or shipment depends on your employees showing up, retaining talent is key. This is why some clients use year-end funds (often also Flex Line) to invest in team cohesion. Well-timed bonuses, off-site activities, or team activities may not show up as productivity items, but their effects are there.
We’ve seen clients fund everything from regional team gatherings to performance-based incentives. These small investments build trust, reinvigorate teams, and make people feel valued.
5. Act quickly on expired opportunities
Last December, one of our clients had the opportunity to acquire a facility to expand its distribution reach and open its doors to national retailers. But the windows are tight. If the deal doesn’t close by the end of the year, the facility’s certification will expire and it will be auctioned off.
We stepped in with $10 million of junior capital to support the senior lenders’ move and structure repayments around the pending refinancing that was part of the New Year’s resolution. Opportunities don’t wait, and neither do we. Opportunities like this often come up in end-of-year conversations. If one comes along, we’ll help you sort your capital quickly without cutting corners.
6. Enter Q1 with a polished ledger
If you hold a tiered short-term loan or vendor financing, now is a good time to clean up your history. Streamlining these sources into a single structure improves clarity for your books and potential financing partners.
When a business looks like it’s in trouble, lenders take notice. That’s why we’re seeing clients use December to restructure their financing: pay down high-friction sources, consolidate lines, or reset debt maturities. Our goal is to emerge in the first quarter with a ledger that is easier to explain and easier to build.
7. Know the price changes in January in advance
Capital can be a vehicle for speed or a shield against inflation. You can now rely on flexible financing to lock in price when cost increases have been announced or anticipated early in the first quarter. Whether it’s a software update, a large shipment or a logistics contract, the logic is simple: buy before costs increase and stay one step ahead.
This isn’t just a cost-saving exercise. It’s a profit protection strategy for businesses that can’t afford the volatility of the new year.
The final phase of the year is an opportunity to turn capital into momentum. Whether you seize the opportunity, clean up the books or make smart investments, taking the right actions now can lower your tax burden and strengthen your position through 2026.
Our team works with clients every December to ensure the timing is good for them and capital is aligned with what matters most.
We’re here to help you fund your end-of-year show, but the clock is ticking. If you want to take advantage of this, get started today.
