Tax Laws Changed and Updated
for 2026

For U.S. businesses, 2026 is more than a new tax year. It is a year in which reporting thresholds and several significant federal tax provisions have changed or been updated.

Not every change applies to every business. Entity type, industry, income level, the nature of an asset, and the transaction date can all affect the result. The five areas below deserve particular attention in 2026 recordkeeping and tax planning.

1. The Threshold for Certain 1099 Reporting Increased to $2,000

For payments made in 2026, the federal threshold for certain Forms 1099-NEC and 1099-MISC increased from $600 to $2,000. Beginning in 2027, the amount is scheduled to be adjusted for inflation.

The higher threshold does not eliminate vendor recordkeeping. Businesses should still collect Forms W-9 and track totals by service provider and payment type throughout the year. Certain payments subject to backup withholding may remain reportable regardless of amount.

A higher reporting threshold does not remove the responsibility to maintain complete records.

2. The Section 179 Limit Increased for 2026

For eligible property placed in service in 2026, the maximum Section 179 deduction increased to $2,560,000. The deduction begins to phase out when the total cost of eligible property exceeds $4,090,000. A separate $32,000 limit applies to eligible SUVs.

Section 179 is not automatic. Eligibility, business-use percentage, placed-in-service date, and taxable business income must all be considered.

3. 100% Bonus Depreciation Became Permanent

100% bonus depreciation was made permanent for certain qualified property acquired after January 19, 2025. It may allow a business to deduct the full business-use cost of an eligible investment in its first year.

Immediate expensing is not always the best choice. Expected future income, cash flow, and personal-use percentage should be evaluated when comparing bonus depreciation with Section 179.

4. Domestic Research Expenditures May Again Be Currently Deducted

For tax years beginning after 2024, qualifying domestic research and experimental expenditures may be deducted as current business expenses under new Section 174A. A business may instead elect to capitalize and amortize those costs over at least 60 months.

Determining whether software development and other costs qualify requires a technical review. Different capitalization rules continue to apply to research conducted outside the United States.

5. The QBI Deduction Became Permanent

The Qualified Business Income deduction—Section 199A became permanent for eligible owners of sole proprietorships, partnerships, and S corporations. When the requirements are met, the deduction may be up to 20% of qualified business income.

Income level, type of business, W-2 wages, and qualified property limitations still apply. Not every pass-through business automatically receives a 20% deduction.

What Should Businesses Do in 2026?

• Complete Forms W-9 in contractor and vendor files.
• Track 1099-reportable payments by recipient and payment type.
• Evaluate the tax effect of equipment and technology investments before purchase.
• Track software development and research costs in separate accounts.
• Review the impact of entity structure on QBI and other deductions before year-end.

Updated tax laws affect more than the return itself—they can influence recordkeeping and investment decisions throughout the year. Effective planning begins before the transaction, not after the tax year closes.

This content is for general informational purposes only and is not tax or legal advice. Federal and state treatment may vary based on legal structure, tax classification, industry, and specific circumstances. A business-specific situation should be evaluated separately.