OBBBA Framework
"One, Big, Beautiful Bill" (OBBBA) dictates 2026 tax standards. Follow new federal mandates for tax preparation. Note permanent status of key deductions. Maintain compliance with modified reporting thresholds.
Core Provisions
- Permanent QBI status.
- Restored 100% bonus depreciation.
- Increased Section 179 limits.
- Modified SALT cap levels.
- Expanded 1099 reporting requirements ($2,000 threshold).
Classification Selection
Identify LLC tax classification. Default status depends on member count. Elect alternative status via IRS filings. Review business formation documents for current standing.
Disregarded Entity
- Applies to single-member LLCs.
- Report income on Schedule C (Form 1040).
- Subject to full self-employment tax.
- No separate federal income tax return.
Partnership
- Applies to multi-member LLCs.
- File Form 1065 annually.
- Issue Schedule K-1 to members.
- Flow-through taxation to personal returns.
S-Corp Election
- File Form 2553.
- Pay reasonable W-2 salary to owner-employees.
- Distribute remaining profit as dividends.
- Avoid self-employment tax on non-wage distributions.
C-Corp Election
- File Form 1120.
- Subject to double taxation.
- Retain earnings within the entity.
- Benefit from flat 21% corporate rate.
QBI Thresholds
Apply 20% Qualified Business Income deduction. Utilize OBBBA permanence. Monitor 2026 inflation-adjusted phase-in ranges.
2026 Income Limits
- Single Filers: $203,000 threshold.
- Married Filing Jointly (MFJ): $406,000 threshold.
- Phase-in range: $50,000 (Single) / $100,000 (MFJ).
SSTB Restrictions
- Applies to Specified Service Trades or Businesses.
- Includes health, law, accounting, and consulting.
- Deduction eliminates completely above phase-out upper limits.
- Upper Limit Single: $253,000.
- Upper Limit MFJ: $506,000.
Depreciation Rules
Maximize asset write-offs. Use 100% bonus depreciation for qualifying property. Apply rules to new and used equipment. Use consulting services for asset classification.
Bonus Depreciation
- Rate: 100%.
- Effective Date: Tax years beginning after December 31, 2025.
- Property Type: Tangible property with 20-year life or less.
- Excludes: Certain long-production period property.
Section 179 Expensing
- Spending Cap: $2.56 Million.
- Phase-out Threshold: $10 Million.
- Scope: Software, equipment, office furniture, certain building improvements.
- Restriction: Deduction cannot exceed aggregate taxable business income.
SE Tax Rates
Calculate self-employment (SE) tax for non-S-Corp LLCs. Monitor wage base adjustments. Use payroll services for accurate withholding.
2026 Rate Schedule
- Total Rate: 15.3%.
- Social Security: 12.4%.
- Medicare: 2.9%.
- Additional Medicare: 0.9% on income exceeding $200k (Single) / $250k (MFJ).
Wage Caps
- Social Security Limit: $184,500.
- Medicare Limit: No cap.
- Net Earnings Calculation: Multiply net profit by 92.35% before applying tax.
S-Corp Deadlines
Meet election timelines. File Form 2553 with the IRS. Secure S-Corp status for 2026.
Critical Dates
- Election Deadline: March 16, 2026.
- Alternative Deadline: 75 days after formation for new entities.
- Late Relief: Reference Revenue Procedure 2026-17 for revoking prior elections or late filing.
Revocation Procedures
- Submit written statement to IRS.
- Obtain consent from members owning >50% of shares.
- File by March 16 for current year effectiveness.
SALT Considerations
Evaluate State and Local Tax (SALT) implications. Monitor state-level Pass-Through Entity Tax (PTET) elections.
SALT Cap
- OBBBA Limit: $40,000.
- Coverage: State income tax, property tax.
- Duration: Through 2029.
PTET Strategy
- Pay state tax at the entity level.
- Bypass federal SALT cap.
- Claim federal deduction for state taxes paid.
- Verify state-specific eligibility.
BOI Reporting
Comply with Beneficial Ownership Information (BOI) mandates. File through FinCEN. Avoid non-compliance penalties. Protect your firm with business insurance.
Reporting Requirements
- Identify beneficial owners (>25% ownership or substantial control).
- Provide legal name, date of birth, and address.
- Submit unique identifying number from government ID.
- Upload image of ID document.
Filing Deadlines
- New Entities: 90 days from formation.
- Existing Entities: Immediate filing required if not previously submitted.
- Updates: 30 days after any change in owner information.
Compliance Steps
- Review classification.
- File Form 2553 by March 16.
- Calculate QBI eligibility.
- Apply 100% bonus depreciation.
- Check SE tax cap ($184,500).
- Submit BOI report.
- Analyze SALT/PTET.
- Contact MCG Service.
Documentation Checklist
- LLC Operating Agreement.
- 2025 Tax Returns.
- 2026 Asset Purchase Receipts.
- Payroll Records.
- Owner ID Documents.
Directives
- Schedule Appointment.
- Consult Expert.
- Verify Status.
- Review Files.
- Submit Forms.