The start of a new tax year means updates that affect how you manage your business, and 2026 is no exception. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, includes several provisions that directly affect small business owners. These changes influence deductions, reporting rules, and long-term financial planning. With a clear understanding of what is ahead, you can move into 2026 with more predictable expectations and fewer surprises at tax time.
QBI Deduction and Individual Rate Extensions That Affect Pass-Throughs
Many small businesses rely on the Qualified Business Income (QBI) deduction that was originally set to expire in 2025. The OBBBA has made this deduction permanent, which gives S corporations, partnerships, LLCs, and sole proprietors more confidence in their long-term tax planning. Owners who qualify can continue to deduct up to 20 percent of their business income, subject to the rules that already apply.
The law also maintains the existing individual tax brackets, including the top rate of 37 percent. Since pass-through income is taxed at the individual level, these extensions help business owners understand how their income will be taxed in 2026 and beyond.
100 Percent Bonus Depreciation and Higher Section 179 Limits
Small business owners planning equipment purchases will see meaningful changes as they look ahead to 2026. The OBBBA restores and makes permanent 100 percent bonus depreciation for qualifying property placed in service after 2024, which allows you to deduct the full cost of eligible equipment or technology in the first year rather than depreciating it over time.
Section 179 expensing limits also increase under the new law. The maximum deduction rises to $2.5 million, and the phase-out threshold begins at $4 million. These amounts adjust for inflation, which gives business owners more room to invest without losing the ability to deduct the full cost. This combination of provisions gives you flexibility when planning major purchases or upgrades.
Updated 1099 Reporting Rules for 2026
Small businesses that work with independent contractors should prepare for updated reporting requirements. Beginning with payments made in 2026, the threshold for issuing Form 1099-MISC or 1099-NEC rises from $600 to $2,000 per contractor. This change reduces paperwork for many small businesses, although the income is still taxable for the contractor.
The OBBBA also restores the $20,000 and 200-transaction threshold for Form 1099-K. Businesses that use online payment platforms may see fewer 1099-K forms issued, but accurate records remain important. Even when information returns are not required, the IRS still expects complete reporting.
FAQs
Do these new rules apply to every small business?
Most provisions apply broadly, although some affect pass-through owners more directly than C corporations. A CPA can review your structure to confirm how the rules apply.
Will these changes reduce my taxes automatically?
Not necessarily. The benefits depend on your income, purchases, and the type of business you operate.
Do I need to update my bookkeeping?
Yes. New 1099 thresholds and expanded expense rules require careful tracking of payments and asset purchases.
Partner With Myrick CPA for Confident 2026 Tax Planning
Tax law changes can create uncertainty, but you do not need to navigate them alone. Myrick CPA helps small business owners in Washington, D.C., and across the country review their records, plan purchases, and prepare for the year ahead. Our virtual consultations and secure online portal make it simple to stay organized and informed.
To gain a clear understanding of how the OBBBA may affect your business in 2026, schedule a tax planning session with Myrick CPA today.
