While the 2025 budget bill created some new tax breaks business owners can take advantage of immediately, the meat of the changes to the tax law will start to roll out in 2026. The tax code for businesses saw several significant overhauls, which is likely to cause some confusion, but it could lower your overall tax burden. Some aspects of those changes are still unclear. The IRS is still reworking its systems, creating new forms, and educating tax professionals about the changes as businesses and individuals plot their year-end tax strategies. And you’ll definitely want to consult with your tax professional before making any changes to spending. That said, here are some of the upcoming changes you’ll want to keep on your radar as the 2026 tax season gets underway.100 percent bonus depreciation on business property
The budget bill made this tax benefit permanent for most qualifying property, letting businesses deduct the full cost of assets, including furniture, production equipment, and land improvements, for the year they’re placed into service. That brings immediate tax benefits, rather than doling them out over a number of years.Accounting firm KPMG notes that roofs and HVAC systems for nonresidential buildings are not bonus eligible. However, they might still qualify for a different sort of expensing (called Section 179) if they are done in buildings that have already been placed in service. Reporting threshold changes
The threshold for issuing documents like 1099 forms will increase substantially starting in 2026. Payments to independent contractors, which currently must be reported if they are $600 or more, won’t be necessary until those contract workers run up $2,000 in billing. (And that number will be adjusted annually for inflation.) For people who run small businesses that take payments through PayPal and Venmo, they won’t have to worry about tax paperwork when they hit $600 in sales anymore. That threshold was restored to the original $20,000 (or more than 200 transactions).R&D expenses
Before the budget bill was signed, businesses that conducted research and development in the U.S. had to amortize those costs over five years. Now, they’re fully and immediately deductible in the year they’re incurred, which can significantly lower tax burdens. (The option to amortize the costs over 60 months remains, if you’d prefer to spread out the deductions.) R&D done overseas will continue to be amortized over a 15-year period. Small businesses, meanwhile, can amend their 2022, 2023, and 2024 returns to retroactively apply immediate expensing of R&D costs and claim refunds.Qualified Business Income (QBI) Deduction
The 20 percent QBI deduction, which was set to expire at the end of 2025, is now permanently part of the tax code for LLCs, S corporations, partnerships, sole proprietorships, and other pass-through entities. That will let eligible business owners deduct up to 20 percent of their company’s income. Starting in 2026, though, the deduction will begin to phase out for individuals who earn above certain income thresholds (approximately $278,000 for people whose filing status is single or head of household, $556,000 for people married filing jointly). Also next year, anyone with at least $1,000 of qualified business income will receive a minimum deduction of $400, even if their deduction would otherwise be fully phased out.Business interest deduction
The way the IRS calculates adjusted taxable income is changing. Businesses will be able to add back depreciation and amortization when determining that number, which raises the ceiling on deductible business interest. That means lower tax bills. If your company receives a large amount of foreign income, though, you’ll want to check with your tax professional, as there were changes made to the business interest expense deduction limitation for businesses in those circumstances.
