2026 Tax Changes for Small Business

December 24, 2025

In 2026, several high-impact federal rules shift for business owners—especially around inflation-adjusted thresholds,
depreciation/expensing decisions, and pass-through planning. This guide focuses on what matters and what to do before you file.

Published: December 24, 2025
Written by: MyBizNerd Staff
Key sources: IRS.gov, IRS Newsroom, IRS inflation-adjustment releases

Tax disclaimer (read this first): This guide is educational only and not tax or legal advice.
Tax rules can change, and the right move depends on your entity type, state conformity, payroll setup, and income.
Verify details with IRS.gov and/or a qualified tax professional.

What’s “new” for 2026 (the big picture)

Takeaway: 2026 is mainly about (1) inflation-adjusted limits and (2) business-owner provisions that were extended/modified by recent legislation,
plus transitional depreciation rules where dates matter.

Inflation adjustments move brackets/thresholds that change effective tax rates.
Depreciation timing (acquired + placed-in-service dates) can change allowable expensing.
Section 179 remains a core lever for profitable businesses buying equipment.
Pass-through planning still matters a lot for LLCs, partnerships, and S-corps.

Our research standards

2026 inflation adjustments you’ll actually feel as a business owner

Takeaway: Even if your business didn’t “change,” your taxes might—because brackets, deductions, and thresholds moved.
This is especially true for pass-through owners.

Planning moves that usually pay off:

Re-run your estimated tax math for 2026.
Model timing (income/expenses) if you’re near phase-outs.
Coordinate retirement contributions with tax thresholds.

LLC vs Sole Proprietor

Bonus depreciation in 2026 (dates matter)

Takeaway: In 2026, you must track acquired and placed-in-service dates carefully.
Transitional rules can change the outcome.

Acquired date: contract / binding purchase timing
Placed-in-service date: when the asset is ready and available for use
Documentation: invoices, proof of business use, and a placed-in-service note

Track expenses & deductions

Section 179 expensing in 2026 (still a core tool)

Takeaway: Section 179 is often the “control knob” when you want predictable taxable income rather than maxing a deduction blindly.

Useful for profitable years where you want to manage taxable income.
Often coordinated with bonus depreciation for best results.
State conformity varies—don’t ignore state impact.

Quarterly estimated taxes

Pass-through owners in 2026 (LLCs, partnerships, S-corps)

Takeaway: The biggest wins usually come from clean projections + owner pay strategy + equipment timing.

Revisit S-corp reasonable compensation if applicable.
Ask for a “what-if” model (profit, wages, purchases) from your CPA.
Keep books clean so planning is based on real numbers.

How to pay yourself

2026 planning checklist

Takeaway: Don’t wait until filing time. Plan in Q3/Q4 using real projections.

Monthly bookkeeping: reconcile accounts, separate business/personal.
Run scenarios: profit, payroll, equipment (bonus vs 179).
Document assets: invoices, business-use logs, placed-in-service notes.
Check state rules: don’t assume your state mirrors federal expensing.

Start: estimated taxes

Reminder: Educational only, not tax/legal advice. Verify with IRS.gov and a qualified pro.

FAQs

Do small businesses get “new” tax deductions in 2026?

Some changes are new rules that carry into 2026, while others are annual inflation adjustments. Your results depend on entity type, payroll, and timing—model it.

Is bonus depreciation 100% or 20% in 2026?

It depends on acquisition and placed-in-service timing and any transition rules that apply. Track dates and coordinate elections with your pro.

What should LLC or S-corp owners focus on first?

Clean books, profit projections, owner pay strategy, and equipment timing—those are typically the biggest levers.

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