Tax

Tax Changes Taking Effect in 2026: SMB Owner Edition

What's changing for small business owners and individuals in 2026: TCJA permanence, 100% bonus depreciation restored, §174A R&D expensing, the 1099-K repeal, and more.

By Aparna Devalla, CPA4 min · 5 slidesUpdated July 26, 2026

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TCJA Sunset on the Horizon

Many Tax Cuts and Jobs Act (2017) individual provisions sunset at the end of 2025 absent legislation, but the One Big Beautiful Bill Act (OBBBA) of 2025 made most permanent or extended them.
Individual rates remain at TCJA levels (top 37%) rather than reverting to pre-2018 levels (top 39.6%).
Standard deduction remains elevated (post-TCJA levels, indexed).
Estate tax exclusion remains at elevated levels (indexed annually) rather than reverting to ~$5.5M.
Result: most of TCJA continues into 2026 and beyond, but specific provisions still phase.

Bonus Depreciation: 100% Again, Permanently

OBBBA permanently restored 100% bonus depreciation for qualified property acquired AND placed in service after January 19, 2025.
The old TCJA phase-down (80% in 2023, 60% in 2024, then 40%/20%/0%) is repealed; 2026 buyers get full first-year expensing again.
Cost-segregation studies on real estate are back to full power: reclassified short-life components qualify for 100% bonus.
Section 179 also expanded: up to $2.56M of expensing in 2026, phasing out above $4.09M of purchases.

Section 174 R&D Expensing Is Back

OBBBA added §174A: domestic R&D expenses are immediately deductible again, and the fix is permanent.
Small businesses could elect to apply the relief retroactively to prior capitalized years; if you amortized 2022–2024 R&D, ask whether catch-up deductions were claimed.
Foreign R&D is still capitalized and amortized over 15 years; offshore development retains the old treatment.
Coordinate with the §41 R&D credit: it's still available, but you can't double-dip on the deduction.

Other 2026 Items Worth Knowing

Retirement plan limits continue to adjust upward for inflation. Solo 401(k) total limit is $72,000 for 2026, with a $24,500 employee deferral.
Beneficial Ownership Information (BOI) reporting no longer applies to U.S.-formed companies: FinCEN's March 2025 interim final rule exempted all domestic entities; only foreign-formed entities registered in a U.S. state still file.
The 1099-K $600 threshold is gone; OBBBA repealed it retroactively. Third-party payment platforms (Stripe, PayPal, and Venmo business) report at the original $20,000-and-200-transactions threshold, though several states keep lower state-level thresholds.
State PTET elections continue in most states: California, New York, Illinois, Massachusetts, and many others.
Cross-border tax: FBAR, PFIC, and Form 5471/8865 rules unchanged. Penalties for non-compliance continue to be severe.
Need a year-by-year tax planning roadmap for your business? Rubric Financial includes forward-year planning in every annual engagement.

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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.

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