TAX HIGHLIGHT
OBBBA in 2026: Key Business Tax Planning Considerations
The One Big Beautiful Bill Act( OBBBA) introduces several planning opportunities for businesses, with certain provisions taking effect in 2026, including the revival of some previous legislation from the Tax Cuts and Jobs Act( TCJA). While taxpayers may have already incorporated some OBBBA provisions on their 2025 returns, there is still an opportunity to evaluate how these changes can help maximize tax savings for your business this year.
Key Considerations Keep these key tax provisions in mind when planning this year: Accelerated bonus depreciation.
One of the most favorable provisions included in the OBBBA was the permanent 100 % bonus depreciation for the cost of qualified new and used assets for property acquired and placed into service after Jan. 19, 2025.
The new law also introduces a 100 % deduction for the cost of“ qualified production property”( generally, nonresidential real property used in manufacturing) placed into service after July 4, 2025, and before 2031. The IRS recently released guidance related to this depreciation deduction, which can be found on page 19.
In addition, the OBBBA increases the Section 179 expensing limit to $ 2.56 million and the phaseout threshold to $ 4.09 million for 2026.
Together, the depreciation changes are expected to encourage capital investments, especially by manufacturing, construction, agriculture and real estate businesses.
Permanent qualified business income( QBI) deduction.
The Section 199A deduction for QBI for owners of pass-through entities( such as partnerships, limited liability companies and S corporations) and sole proprietorships was slated to expire after 2025. The OBBBA makes the QBI deduction permanent, plus expands the deduction limit phase-in ranges for specified services, trades or businesses and other entities subject to the wage and investment limitation.
For 2026 and beyond, instead of the distance from the bottom of the range( the threshold) to the top( the amount at which the limit fully applies) being $ 50,000, or, for joint filers, $ 100,000, it’ s $ 75,000, or, for joint filers, $ 150,000, which will allow larger deductions for some taxpayers.
For 2026, the ranges are $ 201,750 – $ 276,750( up from $ 197,300 – $ 247,300 for 2025), double those amounts for married couples filing jointly. The threshold amounts will continue to be annually adjusted for inflation.
Consider the potential impact of the limit phase-ins on your 2026 QBI deduction. There may be steps you can take to make the most of the significantly expanded phase-in ranges.
Reduced threshold for excess business loss limitation.
The deductions for current-year business losses incurred by noncorporate taxpayers generally can offset income from other sources, such as salary, self-employment income, interest, dividends and capital gains, only up to the annual limit.
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