As 2026 approaches, small businesses face a wave of tax law changes and IRS updates that could significantly impact financial planning, payroll, and compliance. These changes stem largely from the One Big Beautiful Bill Act (OBBBA), signed into law in 2025, and annual IRS inflation adjustments. Understanding what’s new—and preparing early—can help you avoid surprises and maximize savings.
Standard Deduction and Tax Brackets Adjusted
The IRS has announced inflation-based adjustments for 2026. The standard deduction rises to:
- $32,200 for married couples filing jointly
- $16,100 for single filers
- $24,150 for heads of household
Tax brackets remain at seven tiers, with the top rate of 37% applying to incomes above $640,600 (single) or $768,700 (joint).
Qualified Business Income (QBI) Deduction Made Permanent
One of the biggest wins for small businesses: the 20% QBI deduction for pass-through entities (sole proprietors, partnerships, S-corps) is now permanent. This deduction reduces taxable income for eligible businesses and offers a minimum $400 deduction for anyone with at least $1,000 of qualified business income.
Bonus Depreciation and Section 179 Expensing
100% Bonus Depreciation has been restored and made permanent, allowing businesses to immediately expense the full cost of qualifying assets.
Section 179 limits have increased to $2.5 million, with a phase-out starting at $4 million, indexed for inflation from 2026 onward.
Reporting Threshold Changes
- 1099-NEC threshold rises to $2,000.
- 1099-K threshold returns to $20,000 and 200 transactions.
These changes mean businesses must update accounting systems to avoid compliance issues.
Payroll and Employee Tax Breaks
New deductions for tips and overtime apply through 2028, offering tax relief for employees—but only if payroll systems are configured correctly. Employers should review payroll structures now to ensure compliance.
Interest Deduction Rules and R&D Expensing
The interest expense limitation calculation reverts to the EBITDA standard, allowing more deductions. Additionally, businesses can fully expense qualifying research and experimental costs, a major benefit for innovation-focused companies.
Expiring Credits and Energy Incentives
Several energy-related credits phase out after 2025, including solar and EV credits. Businesses planning green upgrades should act before year-end 2025 to capture these benefits.
Action Steps for Small Businesses
- If you are a payroll client of Integra, we have you covered! Our payroll systems have been updated for all new 2026 legislation.
- Review entity structure to optimize QBI and other benefits.
- Plan capital expenditures strategically to leverage bonus depreciation and Section 179.
- Consult your tax advisor early—waiting until January could cost you.
Bottom Line
The 2026 tax landscape offers opportunities for savings but also introduces complexity. Proactive planning is essential to stay compliant and competitive. At Integra Business Solutions, we help small businesses navigate these changes with confidence. Contact us today to prepare your business for a smooth transition into 2026.