Tax Planning in 2026: What Business Owners Need to Know Right Now

The Tax Landscape in 2026

2026 is a pivotal year for tax planning. Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to expire — meaning the rules that governed your taxes for the past several years may be changing significantly. Whether Congress acts to extend, modify, or let these provisions sunset will have a direct impact on your tax bill. Here is what to watch and what to do right now.

Bonus Depreciation Is Phasing Down

Bonus depreciation — which allowed businesses to immediately deduct 100% of the cost of qualifying assets — has been stepping down. In 2026, the rate has decreased from its peak, making the timing of asset purchases more important than ever. If you are planning to buy equipment, vehicles, or make improvements to property you own, talk to your advisor before you spend — not after.

Individual Tax Rates May Increase

Several individual income tax provisions from the TCJA — including lower marginal rates, the increased standard deduction, and the pass-through deduction (Section 199A) — are set to expire. For S-Corp owners and LLC members, the Section 199A deduction has been allowing a 20% deduction on qualified business income. If this expires, it represents a significant increase in effective tax rates for many small business owners. Planning now — including strategies to accelerate income or restructure — can help mitigate the impact.

The Pass-Through Deduction (Section 199A)

If your business qualifies for the 20% pass-through deduction, make sure you are capturing it fully. There are income thresholds and limitations based on your type of business and W-2 wages paid. This deduction does not happen automatically — it requires proper planning and structuring to maximize.

Retirement Contributions Are Higher Than Ever

Contribution limits for retirement accounts have increased in recent years, and 2026 is a great time to maximize them. Solo 401(k), SEP-IRA, and defined benefit plans all offer powerful deductions for business owners. If you are not already maximizing your retirement contributions as a tax strategy, this should be a priority conversation with your advisor.

IRS Enforcement Is Increasing

The IRS has significantly increased its audit and enforcement activity, particularly targeting small businesses, cash-intensive industries, and high-income earners. This makes clean books, documented deductions, and proper entity compliance more important than ever. If your records are disorganized or your deductions lack documentation, now is the time to clean that up — before a notice arrives.

What to Do Right Now

•      Schedule a mid-year tax planning review with your advisor

•      Review your entity structure and compensation strategy

•      Assess any major purchases or investments planned for the rest of the year

•      Confirm your estimated tax payments are accurate

•      If you own property, evaluate whether a cost segregation study makes sense

2026 is not a year to be passive about your taxes. The businesses that come out ahead will be the ones making informed, proactive decisions now.

TAX PROS ADVSISORS is here to help you navigate this. Book a call at ntexcg.com/book-a-call