When the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, it brought some of the biggest tax shifts small businesses have seen in years. Several pandemic-era or temporary provisions are now permanent, others have been expanded, and a few rules are going in a new direction altogether.
If you’re a business owner, it’s not too late to adjust your 2026 tax plans based on these changes. Here’s a straightforward look at a few of the major changes and what they mean for your strategy in the year ahead.
1. The QBI Deduction Is Here to Stay
The Qualified Business Income (QBI) deduction under Section 199A — originally created by the Tax Cuts and Jobs Act — is now permanent.
* Why this matters: Owners of pass-through entities (sole proprietorships, partnerships, and S corporations) can now plan long-term around the 20% deduction, and possibly a slightly higher rate, depending on future tax legislation.
Specified service trades or businesses (SSTBs) still need to monitor phase-outs, but at least the rules are no longer tied to a 2025 expiration date. SSTBs include the fields of health, law, accounting, consulting, and other businesses where income comes primarily from the owner’s or professionals’ skill, expertise, or reputation.
* What you should do: Revisit your entity structure and compensation strategy with the assumption that QBI isn’t going anywhere.
2. Bonus Depreciation and Section 179 Get a Boost
The OBBBA also brings back 100% bonus depreciation for eligible property obtained after January 19, 2025.
Additionally, the Section 179 deduction limit jumps to just over $2.5 million, while its phase-out threshold grows to about $4 million. These amounts will be indexed for inflation annually.
* Why this matters: Having clarity about expensing long-term enables businesses that are planning equipment or technology purchases to better predict cash flow and budgeting.
* What you should do: If you’ve been holding off on capital purchases due to uncertainty, you can now build them into your 2025 – 2026 plans with confidence. Also, take a moment to evaluate whether purchases should be accelerated based on business plans.
3. Qualified Small Business Stock Rules Become Even More Attractive
For C-corporations and their shareholders, the OBBBA enhances provisions around Section 1202 Qualified Small Business Stock (QSBS).
* Why this matters: The exclusion for gain on sale of QSBS still applies (with potential for larger benefits for QSBS issued after July 4, 2025). Early planning is key, especially for founders or owners eyeing future growth or an eventual exit.
* What you should do: If you’re a C-corp — or thinking about becoming one — determine whether your stock qualifies and make sure you’re following proper documentation requirements. It’s also a good time to review how the updated rules may affect the timing of investments or a future exit.
4. Immediate Expensing Returns for Research and Experimental Costs
Businesses are back to being able to immediately expense domestic research and experimental (R&E) costs, rather than amortizing them over several years.
* Why this matters: This is significant for companies engaged in software development, product design, manufacturing improvements, or any type of innovation. Expensing boosts after-tax cash flow and reduces the administrative burden of tracking multi-year deductions.
* What you should do: Review your R&E activities and ensure all eligible expenditures are well documented. It’s also worth talking with your advisor about any retroactive planning opportunities that could support immediate deduction eligibility.
5. Changes to 1099 Reporting Thresholds
The OBBBA also updates information-reporting requirements for third-party payment networks and certain vendor payments.
The 1099-K threshold remains at $20,000 and 200 transactions, reversing the previously expected drop to $600. Additionally, the 1099-MISC/1099-NEC threshold will increase from $600 to $2,000 starting in 2026.
* Why this matters: With higher thresholds and updated reporting rules, your payment and vendor processes may need a refresh.
* What you should do: It’s a good idea to tidy up your vendor files, collect any missing W-9s, and check that your payment-tracking process is current before year-end.
New Tax Landscape, New Game Plan
The OBBBA doesn’t just tweak the tax code. It shifts the landscape for small businesses in meaningful ways. With several provisions now permanent or significantly expanded, 2026 offers more stability for long-term planning than we’ve seen in a while.
That said, the opportunities afforded by the OBBBA necessitate a coordinated strategy. Smart planning will be essential for everything from capital investments and entity structure to R&D spending and compliance updates.
If you’re a business owner, now’s the time to talk with your tax advisor and map out how these changes could affect your growth, your cash flow, and your goals for the years ahead. u
Need help finding a qualified professional to handle your tax planning needs? The membership directory at ChattanoogaChamber.com is a great place to start. Simply search for accountants and bookkeepers and you’ll find a long list of member businesses who can help you, including Market Street Partners (a Smith + Howard company).
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