Tax laws changed. The One Big Beautiful Bill Act (OBBBA) of July 2025 restructured federal tax obligations. Strategies effective in 2024 or 2025 are now obsolete. Compliance requires immediate adjustment.
1. SALT Cap Double
The State and Local Tax (SALT) deduction cap increased. The previous $10,000 limit is now $40,000. This change affects high-tax state residents. Failure to update SALT strategies leads to overpayment.
The Fix:
Review state residency and local tax payments. Use Pass-Through Entity (PTE) elections. Distribute the $40,000 cap across income types. Coordinate with a registered agent service to ensure multi-state compliance.
2. International Overhaul
Global tax structures changed terminology and calculations. GILTI is now "net CFC tested income" (NCTI). FDII is now "foreign derived deduction eligible income" (FDDEI). The 2026 structural changes are sweeping. Pre-2025 international frameworks are no longer valid for cross-border income.
The Fix:
Redesign cross-border investment strategies. Reallocate income under NCTI and FDDEI regimes. Consult specialists for international asset shielding. Ensure all corporate documentation is organized using a professional business organizer to track foreign filings.
3. Inflation Thresholds
The IRS adjusted over 60 tax provisions for inflation in 2026. Standard deductions, credit phaseouts, and bracket thresholds shifted. Using 2025 data results in incorrect estimated payments.
The Fix:
Recalculate all income-based limits. Update accounting software to reflect 2026 IRS figures. Review standard deduction increases before choosing to itemize.
4. Retirement Phaseouts
Roth IRA income phaseouts increased. For 2026, single filer phaseouts begin at $153,000. Married filing jointly phaseouts begin at $242,000. Old contribution thresholds are incorrect.
The Fix:
Re-evaluate direct Roth contributions. Determine if backdoor Roth conversions remain necessary. Adjust automatic contribution levels in employee benefit plans.
5. Employee Deductions
The OBBBA created new deductions for tips and overtime pay. Businesses using outdated payroll methods miss these benefits. Capturing these deductions requires specific tracking of hourly categories.
The Fix:
Modify payroll systems. Track overtime separately from base pay. Implement tip-reporting protocols. Use mail forwarding services to centralize payroll documentation from multiple job sites.
6. Energy Credits
Renewable energy incentives now feature shorter expiration dates. Long-term capital planning based on previous extensions is invalid. Delaying green energy transitions increases tax liability.
The Fix:
Accelerate renewable energy projects. Finalize installations before current expiration windows close. Update capital investment timelines.
7. Expired WOTC
The Work Opportunity Tax Credit (WOTC) expired. Hiring strategies based on this credit no longer provide tax relief. Assumptions regarding workforce development costs must be updated.
The Fix:
Remove WOTC projections from hiring budgets. Focus on new OBBBA employee-focused deductions. Reassess workforce expansion costs without the federal subsidy.
8. Digital Compliance
The direct filing option was withdrawn. The IRS now requires specific digital compliance methods. Manual or legacy filing systems increase the risk of audits and delays.
The Fix:
Adopt certified digital filing tools. Transition away from direct IRS portal reliance. Ensure all business records are digitized and secure. Utilize additional services for compliance consulting.
9. Tariff Impact
Tariffs reached century-high levels. Supreme Court decisions regarding tariff legality are pending. Tax strategies assuming stable import costs are unreliable. Supply chain planning requires dynamic modeling.
The Fix:
Model multiple tariff scenarios. Avoid long-term pricing contracts based on 2025 levels. Analyze the tax impact of increased cost of goods sold (COGS). Maintain clear records using leather file folders for contract reviews.
10. Charitable Floors
Corporations face a new floor on charitable contributions. Deductions are only available after exceeding a specific threshold. Blanket giving strategies are now less effective for tax reduction.
The Fix:
Calculate the specific corporate charitable floor. Plan "bunched" donations to exceed thresholds in specific years. Align giving with corporate structure requirements.
Immediate Action Plan
Update Estimated Payments
Recalculate withholding based on the new 2026 tax code. Adjust quarterly payments to avoid underpayment penalties.
Strategic Asset Management
Harvest capital losses to offset gains. Use cost segregation for 2025 property. Front-load depreciation on eligible equipment.
Compliance Review
Audit current LLC status for OBBBA compliance. Verify registered agent information is current for all entities.
Documentation
Centralize all tax-related correspondence. Use mail forwarding to ensure no IRS notices are missed.
2026 Tax Table Reference
| Provision | 2025 Limit | 2026 Limit | Action Required |
|---|---|---|---|
| SALT Cap | $10,000 | $40,000 | Update PTE Election |
| Roth Phaseout (Single) | $146,000 | $153,000 | Increase Contributions |
| Roth Phaseout (Joint) | $230,000 | $242,000 | Increase Contributions |
| WOTC | Active | Expired | Remove from Budget |
| Direct Filing | Available | Withdrawn | Switch to Software |
Tax strategies are not static. The OBBBA requires a fundamental shift in how small businesses approach liability. Implement these fixes to maintain compliance and protect revenue.