2026 tax landscape. One Big Beautiful Bill Act (OBBBA) implementation. Compliance mandatory.
1. Standard Deductions
New limits apply for 2026. Higher thresholds reduce taxable income.
- Married Filing Jointly: $32,200.
- Single Filers: $16,100.
- Heads of Household: $24,150.
Check personal tax liability. Coordinate with business draws. Maximize cash flow. Use organizational tools for record keeping.
2. Section 179
Expensing limits increased. Capital investment incentives active.
- Deduction Limit: $2.5 million.
- Phase-out Threshold: $3.63 million.
- Eligible Property: Tangible personal property, machinery, equipment, off-the-shelf software.
Purchase necessary equipment. Document purchase dates. Calculate phase-out impact. Execute capital expenditures before year-end.
3. QBI Deduction
Section 199A made permanent. 20% deduction secured for pass-through entities.
- Entity Types: Sole proprietorships, Partnerships, S Corps, LLCs.
- Requirement: Qualified Business Income from U.S. sources.
- Thresholds: Expanded income ranges for 2026.
Determine qualified income. Consult entity structure. Verify W-2 wage requirements for high-income brackets. Ensure LLC compliance for deduction eligibility.
4. Bonus Depreciation
100% bonus depreciation restored. Extended timeline for specific assets.
- Rate: 100% through 2032.
- New Asset Class: Manufacturing and production buildings (Section 168(n)).
- Construction Start: Must begin by December 31, 2028.
- Placed-in-Service: Must occur by December 31, 2032.
Assess real estate investments. Identify manufacturing facility upgrades. Apply full deduction in year one. Monitor construction timelines.
5. R&D Expensing
Domestic R&D amortization repealed. Immediate expensing restored.
- Current Rule: 100% deduction in year incurred.
- Retroactive Benefit: Amend prior returns for capitalized costs.
- Deadline for Refunds: July 6, 2026.
- Eligibility: Gross receipts under $31 million.
Audit R&D spending from 2022-2025. File amended returns. Claim immediate refunds. Discontinue five-year amortization schedules.
6. Childcare Credit
Employer-provided childcare credit expanded. Substantial increase in tax offsets.
- Standard Credit Limit: $500,000.
- Small Business Limit: $600,000.
- Small Business Definition: Average gross receipts ≤ $32 million.
- Qualified Expenses: Facility construction, operation, or resource/referral services.
Calculate childcare expenditure. Apply for credit. Review employee benefit packages. Leverage higher limits for retention.
7. Individual Rates
TCJA individual tax rates made permanent. 2026 sunset avoided.
- Bracket 1: 10%
- Bracket 2: 12%
- Bracket 3: 22%
- Bracket 4: 24%
- Bracket 5: 32%
- Bracket 6: 35%
- Bracket 7: 37%
Forecast personal tax. Align business distributions. Maintain consistent tax planning strategies. Assume rate stability for long-term projections.
8. Interest Deductions
Section 163(j) limitations modified. Adjusted Taxable Income (ATI) calculation revised.
- Exclusion: Depreciation, amortization, and depletion excluded from ATI calculation.
- Impact: Increases allowable interest deduction for capital-intensive businesses.
- Exemption: Businesses averaging ≤ $32 million in gross receipts exempt from limitation.
Calculate 3-year average gross receipts. Determine exemption status. Re-evaluate debt financing costs. Update interest expense reporting.
9. Small Business Definition
Standardized gross receipts threshold established. Efficiency in eligibility determination.
- Threshold: $32 million.
- Calculation: Average annual gross receipts for prior three-year period.
- Inflation Adjustment: Annual updates required.
Verify 2023, 2024, and 2025 receipts. Document average. Apply threshold to Section 163(j), R&D expensing, and Childcare credit eligibility. Maintain accurate filing systems.
10. Tips and Overtime
New exclusions for payroll. Tax-free status for specific earnings.
- Tips: Federal income tax exclusion.
- Overtime: Specific overtime payments excluded from federal tax.
- Employer Duty: Payroll software updates required.
Contact payroll providers. Update employee earning codes. Segregate tips and overtime from base wages. Communicate changes to staff. Ensure withholding accuracy.
Action Checklist
- Review 2026 tax bracket positioning.
- Analyze QBI deduction eligibility.
- Schedule capital purchases for Section 179.
- Verify bonus depreciation for new facilities.
- Audit prior R&D expenses for amendment.
- Evaluate childcare credit opportunities.
- Confirm small business threshold status.
- Update payroll systems for tips/overtime.
- Maintain compliant records.
- Consult professional tax advisors.
Resources
Use available tools for compliance.
Compliance ensures survival. Updates mandatory. Action required.