Tax

Tax Changes Taking Effect in 2026: SMB Owner Edition

What's changing for small business owners and individuals in 2026 — TCJA sunset provisions, bonus depreciation phase-down, OBBBA permanent items, and more.

By Aparna Devalla, CPA4 min · 5 slidesUpdated June 15, 2026

1 / 5

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 (around $13.6M+ indexed) rather than reverting to ~$5.5M.
Result: most of TCJA continues into 2026 and beyond — but specific provisions still phase.

Bonus Depreciation — The Big Phase-Down

100% bonus depreciation (2017–2022) is gone. The phase-down continues: 60% (2024), 40% (2025), 20% (2026), 0% (2027 absent further legislation).
2026 buyers of equipment and qualifying property only get 20% bonus + regular depreciation on the rest.
Cost-segregation studies on real estate become less powerful as the bonus rate drops — still worthwhile, but ROI math shifts.
Plan equipment purchases accordingly: 2026 buys get partial bonus; 2027+ requires Section 179 alone or no immediate expensing.

Section 174 R&D Capitalization Continues

Section 174 still requires R&D expenses to be capitalized and amortized over 5 years (US) or 15 years (foreign).
Despite repeated legislative efforts, full restoration of immediate expensing has not been enacted as of mid-2026.
Plan accordingly: any business developing software internally, doing product R&D, or improving processes has capitalized costs.
Coordinate with §41 R&D credit — credit 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 moves above $69K.
Beneficial Ownership Information (BOI) reporting continues — enforcement now stable; penalties have been assessed.
1099-K $600 reporting threshold continues to be phased in — third-party payment platforms (Stripe, PayPal, Venmo business) report at lower thresholds than historical $20K / 200 transactions.
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.

Use ← → keys, or swipe on mobile

Accounting

When (and How) to Switch From Cash to Accrual Accounting

Cash basis is simple but lies about timing. Here's when accrual is required, when it's just smart, and how to switch.

Accounting

Month-End Close Checklist for Small Businesses

A repeatable monthly close cadence — what to reconcile, what to accrue, and how to know your books are actually done.

Payroll

Multi-State Payroll Setup for Small Businesses

One remote employee in another state means new tax registrations, withholding rules, and compliance work. Here's the playbook.

Previous in TaxYear-End Tax Planning Checklist for SMB Owners Next in Tax California PTET: The SALT-Cap Workaround for High-Income Owners

Back to all resources

Need help applying this to your business?

Talk to a partner at Rubric Financial — one business day response. We'll scope a plan tailored to your situation, with a fixed monthly fee.

Schedule a Consultation