1. Permanent QBI
Status Change
Original 2025 expiration canceled. Deduction permanent. One Big Beautiful Bill (OBBBA) enacted. Small business protection confirmed.
Entity Scope
Pass-through entities eligible. Sole proprietorships included. Partnerships covered. S-Corporations qualified. LLCs eligible. Review LLC compliance guide.
Action Items
Verify entity status. Confirm material participation. Document active business income. Consult MCG Service professionals.
Benefit Structure
20% deduction. Qualified business income only. Investment income excluded. Reasonable compensation excluded. Guaranteed payments excluded.
Compliance Check
Check income thresholds. Use Form 8995. Use Form 8995-A for complex scenarios. Track specified service trade or business (SSTB) limits.
2. Bonus Depreciation
New Rates
100% bonus depreciation restored. Permanent status granted. Phased-out schedules eliminated.
Eligible Assets
Qualified property defined. Machinery included. Equipment covered. Computer hardware included. Specific software types eligible. Qualified improvement property (QIP) included.
Strategic Timing
Purchase assets now. Place in service before year-end. Maximize first-year deduction.
Manufacturing Focus
Qualified production property rules. 100% through 2032. Section 168(n) application. Construction commencement requirements. Place-in-service deadlines.
Documentation Needs
Maintain purchase receipts. Log service dates. Track asset location. Use 2026 tax checklist.
3. Section 179
Limit Increase
2026 limit: $2.5 million. Significant increase from prior years.
Phase-out Threshold
Starts at $3.63 million. Dollar-for-dollar reduction applies. Plan equipment volume accordingly.
Asset Requirements
New and used property. Tangible personal property. Business vehicles over 6,000 lbs. Specific SUV limits apply.
Integration Strategy
Combine Section 179 with bonus depreciation. Zero out tax liability. Carry forward unused amounts.
Verification Steps
Audit asset lists. Confirm business use percentage. Business use must exceed 50%. Calculate exact deduction limit.
4. R&D Expensing
Rule Reversal
Immediate expensing restored. Amortization requirement removed. Domestic research focus.
Qualified Costs
Wages for researchers. Supplies used. Contract research expenses (65% rule). Software development costs.
Domestic Restriction
Applies to U.S.-based research. Foreign research still amortized. Track location of activities.
Action Required
Segment domestic vs. foreign R&D. Document project goals. Record employee hours. Use expert tax planning.
Benefit Impact
Boost cash flow. Lower taxable income immediately. Fund innovation cycles.
5. Interest Deductions
Limit Changes
30% of adjusted taxable income (ATI). New calculation method. EBIT-based approach.
Exclusion Rule
Exclude depreciation and amortization from ATI. Increase available interest deduction.
Applicability
Applies to large-scale small businesses. Small business exemption applies. Gross receipts test: $30 million (indexed).
Financial Review
Audit debt agreements. Calculate interest paid. Run ATI projections. Compare to receipts test.
Planning Tip
Leverage higher limits. Optimize capital structure. Refinance if necessary.
6. Childcare Credits
Credit Enhancement
Base maximum: $500,000. Small business maximum: $600,000.
Eligibility Criteria
Average gross receipts ≤ $32 million. 50% credit rate for qualified expenses.
Qualified Expenses
Building child care facilities. Operating child care facilities. Contracting with providers. Referral services.
Benefit Strategy
Reduce employee turnover. Attract top talent. Claim credit on Form 8882.
Execution Steps
Draft childcare plans. Secure provider contracts. Audit annual receipts. Implement payroll services.
7. Standard Mileage
Rate Update
2026 rate: 72.5 cents per mile. Increase from 2025.
Logistics Compliance
Maintain contemporaneous logs. Record date, destination, and purpose. Record starting and ending odometer.
Method Choice
Compare standard rate vs. actual expenses. Analyze fuel, repairs, and insurance. Choose highest deduction.
Reimbursement Policy
Update employee manuals. Adjust reimbursement rates. Use digital tracking apps.
Vehicle Records
Retain vehicle purchase documents. Track business vs. personal use. Review mobile business guide.
8. Tax Brackets
Individual Rates
Top rate: 37%. OBBBA maintained lower tiers.
Threshold Adjustments
Inflation-indexed brackets. Single: Top rate at $640,600. Married: Top rate at $768,700.
Standard Deduction
Married Filing Jointly: $32,200. Single: $16,100. Head of Household: $24,150.
Withholding Review
Adjust W-4 forms. Estimate annual income. Prevent underpayment penalties.
Strategic Income
Time income recognition. Accelerate deductions. Utilize updated thresholds.
9. Minimum QBI
New Provision
$400 minimum deduction. Guaranteed for qualifying owners.
Requirements
Gross QBI ≥ $1,000. Material participation required. Active business status.
Impact
Benefits very small businesses. Simplifies reporting for micro-entities.
Verification
Confirm active status. Track participation hours. Ensure 750-hour rule or equivalent. Use business formation services.
10. Estimated Taxes
Deadlines
April 15. June 15. September 15. January 15 (2027).
Safe Harbor
Pay 100% of last year's tax. Pay 110% for high-income earners. Pay 90% of current year.
Penalties
Avoid underpayment charges. Use Form 2210. Factor in new 2026 credits.
Action Plan
Calculate quarterly profits. Set aside tax funds. Submit payments electronically via EFTPS.
Next Steps
Review 2026 IRS updates. Schedule consult. Organize records.
Contact MCG Service
Register Agent Services. Tax Planning.