Navigating the New Tax Landscape: A Business Owner's Guide to the 2026 Changes
The "One Big Beautiful Bill Act" (OBBBA), enacted July 4, 2025, represents the most significant restructuring of the U.S. tax code in years. For business owners, this is not a routine update; it is a fundamental shift that creates substantial opportunities for the prepared and significant risks for the unaware. This landmark legislation made many of the business-friendly provisions from the 2017 Tax Cuts and Jobs Act (TCJA) permanent while also introducing a host of new rules and incentives.
This guide from the experts at CBC provides a brief, insightful summary of the key OBBBA provisions most relevant for business owners. Understanding this new landscape is the first step toward effective tax planning for 2026 and beyond.
1. Core Business Deductions & Expensing: Key Provisions Made Permanent
The OBBBA provided much-needed certainty by reviving or making permanent several major tax provisions that are critical for business investment and growth.
100% Bonus Depreciation: Businesses can continue to deduct the full cost of qualifying new and used property in the year it is placed in service. The OBBBA also introduced a new 100% first-year bonus depreciation for certain U.S.-based manufacturing, production, or refining facilities that begin construction between January 19, 2025, and January 1, 2029.
Strategic Implication: This provides a powerful incentive for immediate capital investment, improving cash flow and accelerating the ROI on major equipment, technology, and facility upgrades.
Research & Experimentation (R&E) Expensing: A critical provision for innovators, the OBBBA restores the immediate expensing of domestic R&E costs under Section 174A, eliminating a significant drag on cash flow and encouraging accelerated investment in domestic innovation.
Strategic Implication: This restoration allows tech and manufacturing firms to fully deduct R&D investments in the year they are made, directly boosting profitability and competitiveness.
Business Interest Expense Limitation (Section 163(j)): The calculation for the business interest expense limitation is now more favorable. The limit is once again based on earnings before interest, taxes, depreciation, and amortization (EBITDA), allowing many companies to deduct a greater amount of their interest expense.
Strategic Implication: For capital-intensive businesses with significant depreciation, this change makes debt financing more attractive and may allow for greater leverage in growth initiatives.
2. Updates for Pass-Through Entities (S-Corps, Partnerships, LLCs)
The OBBBA delivered significant and lasting changes for pass-through businesses, resolving years of uncertainty on key issues.
The Qualified Business Income (QBI) Deduction is Here to Stay
The Section 199A QBI deduction has been made permanent. This powerful deduction allows owners of eligible pass-through businesses to shield up to 20% of their business profits from federal income tax, significantly lowering their overall effective tax rate.
State and Local Tax (SALT) Deduction and PTETs
For individuals, the OBBBA temporarily increases the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for households earning $500,000 or less. This change begins in 2025 and is scheduled to revert in 2030.
Critically for business owners, the final version of the OBBBA did not include previously discussed limitations on Pass-Through Entity Tax (PTET) election workarounds. This is a major victory for pass-through owners in high-tax states, preserving what is arguably the most effective strategy for mitigating the federal SALT deduction cap.
3. New Employee-Related Compliance and Credits
While introducing new tax benefits for workers, the OBBBA also created new reporting duties for employers and expanded key business credits.
New Reporting for Tip and Overtime Pay Deductions
The OBBBA created new individual tax deductions for qualified tip and overtime income. While this benefits employees, it establishes a new compliance requirement for employers. Beginning with payments made in 2026, businesses must separately report qualified tips and qualified overtime compensation on employee Forms W-2 or 1099-NEC.
Expanded Business Credits
Employers can take advantage of enhanced credits beginning in 2026:
Paid Family and Medical Leave (PFML) Credit: This credit was made permanent and expanded. Businesses now have the option to claim a credit based on premiums paid for PFML insurance policies, a significant advantage as the credit can be claimed even if no employees take leave during the year.
Employer-Provided Childcare Credit: For tax years beginning after December 31, 2025, the credit percentage increases significantly, and the annual maximum credit amount rises from $150,000 to $500,000. Critically for smaller companies, the law now allows businesses to pool their resources to jointly operate a childcare facility, opening this powerful credit to a much broader range of employers.
4. Reduced Administrative Burden: New 1099 Reporting Thresholds
The OBBBA significantly reduces the administrative burden for many businesses by increasing the reporting thresholds for Forms 1099.
Forms 1099-NEC and 1099-MISC: Beginning in 2026, the reporting threshold for payments to non-employees for services and other non-wage payments increases from 600 to **2,000**. This new threshold will be indexed for inflation starting in 2027.
Form 1099-K: The act reinstated the original, higher reporting thresholds for third-party payment networks, retroactive to 2022. The reporting threshold now reverts to $20,000 in payments AND more than 200 transactions.
5. Other Notable Changes for Business Planning
Several other provisions in the OBBBA have important implications for long-term business strategy, succession planning, and investment decisions.
Estate and Gift Tax Exemption Increase
Effective January 1, 2026, the federal exemption for estate, gift, and generation-skipping transfer (GST) taxes increases to $15,000,000 per individual. This permanent increase provides unprecedented certainty for multi-generational wealth transfer, allowing family businesses to focus on succession planning with greater clarity and potentially reducing the reliance on complex insurance structures.
Shifts in Energy-Related Incentives
The OBBBA altered several clean energy incentives. Key credits for solar and wind projects now have accelerated deadlines, requiring construction to begin by July 5, 2026, to qualify. Additionally, the Section 179D deduction for energy-efficient commercial buildings will terminate for any property where construction begins after June 30, 2026.
International Tax Overhaul
For businesses with multinational operations, the OBBBA enacted sweeping structural changes to the international tax regimes for global intangible low-taxed income (GILTI) and foreign derived intangible income (FDII), taking effect in 2026. Crucially, the final legislation did not include the "revenge taxes" on foreign entities that were proposed in earlier drafts, providing much-needed stability for multinational corporations. Companies with foreign activities should seek specialized guidance to navigate this complex new framework.
Conclusion: Proactive Planning is Key for 2026
The One Big Beautiful Bill Act creates a more predictable tax landscape with many business-friendly opportunities. However, it also introduces new rules and compliance needs that require careful attention. Understanding these changes is crucial for effective tax planning that minimizes liability and maximizes growth.
The One Big Beautiful Bill Act is a fundamental reset of the U.S. tax code, creating clear winners and losers. A passive, compliance-only approach will result in significant missed opportunities. We urge you to engage with our team at CBC to conduct a comprehensive OBBBA impact analysis, ensuring your business is strategically positioned not just to comply, but to thrive in this new landscape.