Tax season hits different this year. The One Big Beautiful Bill Act changed everything: the biggest tax overhaul since 2017. Here's what actually matters for your small business.
1. Bonus Depreciation Returns at 100%
Full deduction. Year one. No more phase-downs.
Buy qualifying business property after January 19, 2025? Deduct the entire cost immediately. Equipment, machinery, vehicles: claim it all on this year's return. Permanent rule. Maximum cash flow impact.
Calculate your capital purchases now. The tax savings are substantial.
2. R&D Expenses: Immediate Deduction
Research costs are now fully deductible. No capitalization. No amortization.
Domestic R&D expenses after December 30, 2024 qualify. Software development, product testing, innovation projects: all immediately deductible. Tech businesses and product companies benefit most.
Document everything. Track your R&D spending separately.
3. Section 179 Limits Expanded
New limits for 2026:
- Maximum expensing: $2.5 million
- Phase-out threshold: $3.63 million
Combined with bonus depreciation, you have serious planning flexibility. Choose which assets go under Section 179 versus bonus depreciation based on your specific tax situation.
Consult your tax advisor. Strategy matters here.
4. Interest Deduction Rules Improved
Better news for leveraged businesses.
Interest expenses now deductible up to 30% of EDITDA (earnings before interest, taxes, depreciation, and amortization). Previous rule used EBIT: much more restrictive.
Real estate businesses, equipment-heavy operations, and companies with significant financing benefit immediately.
Warning: Reverts to EBIT standard in 2030. Plan accordingly.
5. Standard Deductions Increased
2026 rates:
- Single filers: $16,100
- Married filing jointly: $32,200
Higher thresholds mean fewer itemization benefits for some business owners. Run the numbers. Standard deduction might beat itemizing.
6. Retirement Contributions Expanded
Major increases across all plans.
IRA Limits:
- Annual contribution: $7,500
- Catch-up (50+): $1,100
401(k) Contributions:
- Standard limit: $24,500
- Catch-up (50+): $8,000
- Ages 60-63: $11,250 catch-up
Solo 401(k):
- Maximum: $69,000
- Contribute 25% of compensation
New rule: Catch-up contributions over $150,000 income must go to Roth accounts. No exceptions.
Fund retirement. Reduce taxable income. Win twice.
7. Employer Childcare Credit Tripled
Previous limit: $150,000. New limit: $500,000.
Eligible small businesses can claim $600,000.
Employer-provided childcare now makes financial sense. Attract talent. Reduce turnover. Claim substantial tax credits.
Employee benefit strategy just changed. Evaluate childcare options.
8. Payroll Tax Thresholds Updated
Social Security wage base: $184,500
Tax rates unchanged:
- Social Security: 6.2% (employer and employee)
- Medicare: 1.45% (employer and employee)
- FUTA: 6% on first $7,000 (typically 0.6% after credits)
Calculate payroll tax obligations accurately. Underpayment penalties hurt.
9. International Tax Provisions Tightened
GILTI deduction: reduced to 49.2%. FDII deductions: down to 36.5%. BEAT rates: increased to 10.5%.
Foreign income less attractive. Domestic operations more favorable.
Reexamine international structures. Domestic tax advantages expanded.
10. Sales Tax Compliance for E-Commerce
Marketplace facilitators handle sales tax in most states. Amazon, Etsy, eBay collect and remit automatically.
Your own channels? You handle it.
Economic nexus thresholds:
- $100,000 in sales, or
- 200 transactions
Every state where you meet thresholds requires registration, collection, remittance.
Track sales by state. Register where required. Miss this and penalties compound quickly.
Action Required
Review depreciation strategy before year-end. Bonus depreciation and Section 179 limits create planning opportunities: use them.
Calculate interest deduction capacity under EDITDA rules. Finance major purchases before 2030 reversion.
Evaluate retirement contributions. Maxed-out limits mean bigger deductions and better employee benefits.
Assess childcare credit eligibility. Enhanced limits make this benefit financially viable.
Verify sales tax compliance across all channels. E-commerce obligations expanded: ignorance costs money.
Need expert guidance navigating these changes? MCG Service specializes in small business tax strategy.
The Bottom Line
Tax planning beats tax preparation. Every time.
These changes create opportunities: but only if you act. Depreciation benefits expire when you buy assets. Retirement contribution limits reset January 1. Sales tax penalties accrue daily.
Schedule your tax strategy session now. April deadlines arrive faster than you think.
Document purchases. Track expenses. Maximize deductions.
2026 tax rules favor prepared businesses. Be one of them.