2026 Tax Law Overhaul: 5 Things Every Small Business Owner Must Know
What Changed?
The One Big Beautiful Bill Act (OBBBA), signed into law in late 2025, represents the most significant tax overhaul since the 2017 Tax Cuts and Jobs Act. Most provisions take effect January 1, 2026. If you own an LLC, S-Corp, sole proprietorship, or partnership, these changes directly affect your bottom line.
1. QBI Deduction Made Permanent
The 20% Qualified Business Income (QBI) deduction for pass-through entities is now permanent law. Previously set to expire, this provision allows eligible business owners to deduct up to 20% of their qualified business income.
The phase-in thresholds have also been raised to $75,000 for single filers and $150,000 for married filing jointly. There is also a new guaranteed minimum deduction of $400 for anyone with at least $1,000 of QBI.
2. Higher 1099 Reporting Thresholds
- 1099-NEC: The threshold for issuing 1099-NEC forms to independent contractors increases from $600 to $2,000
- 1099-K: Third-party payment platforms (Venmo, PayPal, Square) return to the $20,000 reporting threshold
This significantly reduces paperwork for small businesses. However, all income remains taxable regardless of whether a form is issued.
3. 100% Bonus Depreciation Restored
Full first-year bonus depreciation is back. Qualifying assets purchased in 2026 can be fully expensed in the year of acquisition. This is particularly beneficial for trucking operators purchasing new vehicles or fleet owners expanding their operations.
4. Standard Deduction Increases
For tax year 2026:
- Married filing jointly: $32,200
- Single: $16,100
- Head of household: $24,150
5. Retirement Contribution Limits
Self-employed individuals can contribute up to $69,000 in 2026, with a maximum deduction of 20% of net self-employment income. Planning early helps reduce your tax bill while building retirement savings.
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*This article is for general informational purposes only and does not constitute personalized tax advice. Please verify specific figures with official IRS publications and consult a qualified tax professional for your individual situation.*
FAQ
Is the QBI deduction going to expire again?
No. OBBBA made the 20% QBI deduction for pass-through entities (LLCs, S-Corps, partnerships, sole proprietorships) permanent — it's no longer a temporary provision set to expire.
Can I still claim QBI if my income is low?
Yes. Anyone with at least $1,000 of qualified business income gets a guaranteed minimum $400 deduction. The phase-in thresholds are $75,000 for single filers and $150,000 for married filing jointly.
Below what amount can I skip issuing a 1099-NEC to a contractor?
The threshold rose from $600 to $2,000. Payments under $2,000 don't require a 1099-NEC, but the contractor still owes tax on that income.
What should I know about getting paid through Venmo or PayPal?
The 1099-K reporting threshold returned to $20,000. Payments below that amount won't trigger a 1099-K from the platform, but the income is still taxable.
Can I still fully deduct equipment purchases in 2026?
Yes. 100% bonus depreciation is back, so qualifying assets purchased in 2026 can be fully expensed in the year you buy them instead of depreciated over several years.