Proactive business planning means working with a strategic advisor throughout the year to anticipate tax obligations, model key decisions before you make them, and align your financial structure with where you want the business to go — not just documenting where it has been. For small business owners in the $250K–$5M revenue range, this kind of planning is one of the highest-return investments they can make. The specifics depend on your situation, and a conversation with a qualified advisory team can help you understand exactly what this looks like for your business.
Most small business owners have worked with an accountant at some point. The return gets filed, the bill gets paid, and then it is time to do it again next year. For a long time, that model seemed fine — until the tax bill was bigger than expected, or an equipment purchase turned out to have timing implications no one mentioned, or a new hire created payroll tax obligations that caught the owner off guard.
The distinction between recording history and building a future is not just a positioning statement. It reflects a fundamentally different set of conversations. A compliance-focused firm answers the question: "What happened?" A proactive advisory firm asks: "What are yWhat tax changes should I know about right now as a business owner?
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The One Big Beautiful Bill Act (OBBBA), signed into law in 2025 and effective for the 2026 tax year, is the most significant tax legislation affecting small business owners in nearly a decade. Key changes include permanent 100% bonus depreciation, a permanent 20% Qualified Business Income (QBI) deduction, a Section 179 expensing limit raised to $2.5 million, and a temporary increase in the SALT cap to $40,000. These are not future planning items — they are in effect now, and the decisions you make for the rest of 2026 will determine how much of this legislation actually benefits your bottom line.
Why do these tax law changes matter more than usual?
Most years, the tax planning conversation centers on managing the rules that already exist. This year is different. The OBBBA made several provisions permanent that were previously set to expire, which means the planning decisions you make in 2026 are not one-year moves — they are the foundation of a multi-year strategy.
For business owners, the combination of permanent bonus depreciation, a higher Section 179 limit, a permanent QBI deduction, and a raised SALT cap creates a genuinely different planning environment than anything available in the last several years. But these provisions only produce results if you plan for them intentionally. None of them are automatic.
A Business Advisory and Accounting Partners business advisor works with owners year-round specifically to translate changes like these into decisions — not just awareness. The question is not whether these rules apply to you. It is whether your current plan is capturing them.
What are the most important 2026 tax changes for small business owners?
Bonus depreciation is back at 100% — and it is now permanent
Under the OBBBA, 100% first-year bonus depreciation has been reinstated and made permanent. This means a business that purchases qualified property — equipment, machinery, certain software, and now certain commercial real property — can deduct the full cost in the year of purchase rather than depreciating it over time.
According to Federal Statutes, the OBBBA also adds a 100% depreciation allowance for certain nonresidential commercial real property, which significantly expands the universe of assets eligible for immediate expensing. For owners who have been planning equipment purchases or facility improvements, this is a material change worth modeling before making the decision.
The permanence matters because it removes the uncertainty that made multi-year capital planning difficult. You can now plan equipment investments with a stable understanding of the depreciation treatment available each year.
Section 179 expensing limit rises to $2.5 million
The OBBBA raised the Section 179 expensing cap to $2.5 million, up significantly from prior law. Section 179 allows businesses to deduct the full cost of qualifying equipment and property in the year it is placed in service, subject to income limitations.
For most small businesses, the practical effect of both 100% bonus depreciation and the higher Section 179 limit is that nearly all equipment and qualifying property purchases can be fully expensed in the year of purchase. The strategic question is not which provision applies — it is how to time purchases and structure the deduction to maximize cash flow benefit without creating a taxable loss that cannot be used.
A proactive advisor will model the cash flow and tax impact of a purchase before you make it, not after.
The 20% QBI deduction is now permanent
The 20% Qualified Business Income deduction under Section 199A was originally a temporary provision of the 2017 Tax Cuts and Jobs Act, scheduled to expire at the end of 2025. The OBBBA made it permanent.
For pass-through entity owners — S-Corps, partnerships, sole proprietors, and single-member LLCs — this deduction reduces taxable income on up to 20% of qualified business income, subject to income thresholds and, for specified service trades or businesses, phase-out rules. According to Wolters Kluwer, the OBBBA also introduced a new inflation-adjusted minimum deduction for businesses generating at least $1,000 of QBI, which expands access for smaller operations.
The permanence of this deduction changes how owners should think about entity structure, reasonable compensation, and long-term profit planning. For S-Corp owners specifically, the interaction between the QBI deduction and owner salary decisions is now a multi-year optimization question, not a one-time filing item.
The SALT cap increases to $40,000 through 2029
The OBBBA temporarily raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers with modified adjusted gross income below $500,000. This provision runs through 2029, after which it reverts to prior law unless Congress acts again.
For business owners in high-tax states — California, New York, New Jersey, Illinois, and others — this change meaningfully increases the value of itemized deductions at the personal level. It also interacts with pass-through entity tax (PTET) elections that many states have adopted, which require careful coordination to avoid double-counting or losing deductions.
If you are in a high-tax state and have not revisited your SALT strategy since the OBBBA passed, that conversation is overdue.
1099 reporting thresholds shift — and compliance requirements change
Two 1099 reporting changes take effect in 2026 that affect how businesses document payments to vendors and contractors. According to Wolters Kluwer, the 1099-MISC and 1099-NEC reporting thresholds increase to $2,000 (up from $600), while the 1099-K threshold reverts to $20,000 and 200 transactions for third-party payment processors.
The practical effect for most small business owners: fewer 1099s to issue for smaller vendor payments, but the same compliance obligations for contractors receiving meaningful amounts. If your business relies heavily on contract labor or vendor relationships, a mid-year review of your W-9 collection process and payment records ensures you are not scrambling in January.
[ILLUSTRATIVE EXAMPLE — FICTIONAL]
Hypothetical Business Story (Illustrative Example Only)
This is a fictional example to illustrate how Business Advisory and Accounting Partners would advise a client in this situation.
James owns a physical therapy practice in Georgia with four clinicians on staff and roughly $1.1 million in annual revenue. He operates as an S-Corp, has been profitable for the last three years, and has been meaning to upgrade his clinic's equipment — new therapy tables, updated diagnostic tools, and a patient management system — for over a year.
When the OBBBA passed, James saw news coverage about bonus depreciation but assumed it was primarily relevant to larger businesses or manufacturers. He did not connect it to his practice.
Business Advisory and Accounting Partners would advise James that his planned $140,000 equipment investment — which he was considering spreading across 2026 and 2027 — is now fully expensable in a single year under permanent 100% bonus depreciation. Running the projection: that deduction at his effective rate saves James roughly $40,000 to $50,000 in federal and state tax in the year of purchase, versus spreading the benefit across five to seven years under standard depreciation.
The advisory team would also walk James through his QBI deduction eligibility now that it is permanent, help him model whether his current S-Corp salary needs adjustment given the interplay between reasonable compensation and QBI optimization, and flag that as a Georgia resident, the SALT cap increase gives him additional itemized deduction room at the personal level for 2026 through 2029.
None of these items required James to do anything unusual. They required someone to connect the dots between new law and his specific situation — before the year was over.
If you see pieces of your own business in this hypothetical example, it may be time to sit down with a Business Advisory and Accounting Partners business advisor and talk through what these changes mean for your numbers.
Why Business Advisory and Accounting Partners approaches tax law changes differently
Business Advisory and Accounting Partners, powered by Harness, does not wait for tax season to communicate changes like these. Monitoring IRS guidance, new legislation, and relevant court decisions is part of the advisory cadence the firm maintains year-round — because by the time a change shows up on a tax return, the planning window for that year has usually closed.
The OBBBA created real opportunity for small business owners. But opportunity without a plan is just noise. The firm's role is to translate these changes into specific decisions — timing a purchase, adjusting an owner salary, revisiting an entity structure, or recalibrating estimated payments — before the year ends.
Any firm can record what happened. This firm helps you plan what happens next.
A tax planning alert conversation at Business Advisory and Accounting Partners is a structured review of how current law applies to your specific situation. You will walk through which OBBBA provisions are relevant to your business, what decisions are still on the table for the remainder of 2026, and what a preliminary year-end projection looks like given the new rules.
You will leave with clarity on which provisions affect you, what decisions are worth making before December 31, and what your next planning step should be. There is no obligation to move forward beyond the meeting itself. It is a professional, educational conversation designed to give you a clear picture of where you stand.
| If you want to understand how the OBBBA and current IRS guidance apply to your business, schedule a planning conversation with Business Advisory and Accounting Partners powered by Harness today. |
Book your advisory fit conversation at: https://busadvisory.com/schedule-your-advisory-fit-meeting/
The One Big Beautiful Bill Act (OBBBA) is a major tax law signed in 2025 that took effect for the 2026 tax year. It made several key provisions permanent — including 100% bonus depreciation, the 20% QBI deduction, and lower individual tax rates — and introduced new temporary provisions including a higher SALT cap and expanded reporting thresholds. For small business owners, the most immediate impact is on equipment purchase decisions, entity structure planning, and how much taxable income can be sheltered through the QBI deduction.
The OBBBA raised the Section 179 expensing limit to $2.5 million for 2026, up significantly from prior law. Section 179 allows businesses to deduct the full cost of qualifying equipment and property in the year it is placed in service, subject to income limitations. Combined with permanent 100% bonus depreciation, most qualifying equipment purchases made in 2026 can be fully expensed in the year of purchase (figure as of current tax year — confirm before publishing).
Yes. The OBBBA made the Section 199A QBI deduction permanent, eliminating the expiration that had been scheduled for the end of 2025. Pass-through entity owners — including S-Corp owners, partners, sole proprietors, and single-member LLC owners — remain eligible for the 20% deduction on qualified business income, subject to income thresholds and service business limitations. A new inflation-adjusted minimum deduction is also available for businesses generating at least $1,000 of QBI.
The OBBBA temporarily raised the state and local tax (SALT) deduction cap from $10,000 to $40,000 for taxpayers with modified adjusted gross income below $500,000. This increased cap runs through 2029. For business owners in high-tax states, this meaningfully increases the value of itemized deductions at the personal level and should be factored into annual tax projections (figure as of current tax year — confirm before publishing).
Two changes took effect in 2026: the reporting threshold for 1099-MISC and 1099-NEC increased to $2,000 per payee (up from $600), and the 1099-K threshold for third-party payment processors reverted to $20,000 and 200 transactions. Businesses should review their contractor payment tracking and W-9 collection processes now to ensure January filing is clean and penalty-free.
Now. Most of the OBBBA's most valuable provisions — bonus depreciation, Section 179, QBI optimization — require decisions made before December 31. Waiting until tax season eliminates your planning window entirely. Business Advisory and Accounting Partners builds tax law update reviews into the advisory cadence for clients, and offers initial conversations for business owners who want to understand how current law applies to their situation. Schedule at https://outlook.office.com/book/[email protected]/
