OBBBA One Year In: What Business Owners Need to Know

When the One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025, it made most of the 2017 tax cuts permanent and layered on a long list of new deductions, credits, and phase-outs. A year later, the law has moved from headlines to tax returns. Business owners have now filed their first returns under it, the IRS has issued a steady stream of guidance, and several early deadlines have already come and gone.

With 2026 winding down, this is the right moment to step back and look at what changed, what still needs attention, and where the planning opportunities are before December 31. Here is what our clients need to know.

Key Tax and Compliance Changes From Year One

Permanent rates and a higher standard deduction. The individual brackets from 2017, topping out at 37%, are now permanent. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

Full expensing is back for good. 100% bonus depreciation is permanent for qualifying new and used property acquired and placed in service after January 19, 2025. Section 179 expensing also climbs to $2.56 million for 2026, with the phase-out starting at $4.09 million. A new 100% deduction for qualified production property lets manufacturers and producers write off certain new nonresidential buildings used in production, provided strict timing rules are met.

R&D is deductible again. Domestic research and experimental costs, including software development, can once again be expensed immediately under new Section 174A, starting with tax years beginning after 2024. Foreign research still must be amortized over 15 years. Eligible small businesses (average gross receipts of $31 million or less) had until July 6, 2026 to elect retroactive treatment back to 2022. If you missed that window, talk with us about whether accelerating any remaining unamortized 2022 through 2024 costs still makes sense.

More room to deduct interest. The business interest limit under Section 163(j) is once again based on EBITDA rather than EBIT, which restores deductions for many leveraged and capital-intensive businesses. In March 2026, the IRS released Rev. Proc. 2026-17, which lets real estate and farming businesses withdraw prior elections out of the interest limit. That can unlock bonus depreciation those businesses previously gave up.

SALT relief, with strings attached. The state and local tax deduction cap rose to $40,000 for 2025 and increases 1% a year through 2029. It phases down for higher earners, starting at roughly $500,000 of modified AGI, and reverts to $10,000 in 2030. Importantly, the pass-through entity tax (PTET) election remains available and is still the primary SALT strategy for most business owners.

New information reporting rules. For payments made after December 31, 2025, the Form 1099-NEC and 1099-MISC reporting threshold rises from $600 to $2,000. You will see this on the 1099s filed in early 2027. Form 1099-K thresholds were also rolled back to $20,000 and 200 transactions.

Tips and overtime reporting. The new deductions for qualified tips and overtime (2025 through 2028) are deductions for employees, not exclusions, so payroll taxes and withholding still apply. Employers had transition relief for 2025, but 2026 Forms W-2 add new Box 12 codes for qualified tips (TP), qualified overtime (TT), and Trump account contributions (TA), plus an occupation code for tipped workers. Payroll systems need to be capturing this data now.

Clean energy credits are winding down. EV credits ended September 30, 2025, and residential energy credits ended December 31, 2025. The Section 179D deduction ended for buildings beginning construction after June 30, 2026, and the 45L credit ended for homes acquired after that date.

What It Means for the QBI Deduction

The 20% qualified business income (QBI) deduction under Section 199A was set to expire after 2025. OBBBA made it permanent, which gives owners of S corporations, partnerships, LLCs, and sole proprietorships a stable foundation for long-term planning. Three changes stand out for 2026:

• Wider transition ranges. Beginning in 2026, the income range over which QBI restrictions gradually apply expands to $75,000 for single filers and $150,000 for joint filers, up from $50,000 and $100,000. For non-service businesses, the W-2 wage and qualified-property limits gradually take effect. For specified service businesses, including accounting, law, consulting, and medicine eligibility for the deduction gradually phases out.
• 2026 income thresholds. These restrictions begin above taxable income of $201,750 for single filers and $403,500 for joint filers, measured before the QBI deduction. At $276,750 and $553,500, respectively, the wage and property limits apply in full to non-service businesses, while the deduction for specified service business income is fully eliminated.
• A new minimum deduction. Starting in 2026, owners with at least $1,000 of QBI from businesses in which they materially participate receive a minimum deduction of $400.

Planning takeaways: Owners near the thresholds have more room than before, so year-end moves that manage taxable income (retirement contributions, equipment purchases, timing of income and expenses) can preserve more of the deduction. S corporation owners should revisit the balance between reasonable compensation and distributions, since W-2 wages affect both payroll taxes and the QBI wage limit. Businesses with multiple entities should also confirm whether aggregation still makes sense under the new ranges.

Estate and Gift Tax Considerations

Before OBBBA, the federal estate and gift tax exemption was scheduled to drop by roughly half at the start of 2026. That cliff is gone. Beginning in 2026, the exemption is permanently set at $15 million per person ($30 million for married couples using portability), indexed for inflation starting in 2027. The generation-skipping transfer (GST) exemption matches it, and the annual gift exclusion remains $19,000 per recipient.

That certainty changes the conversation for many families and business owners:

• Less urgency, not less planning. The rush to use exemption before a 2026 sunset has passed, so gifting can be driven by family and business goals rather than a deadline. Remember that "permanent" only means until Congress acts again.
• Income tax now matters more. For estates below the exemption, the bigger opportunity is often the step-up in basis at death. Holding appreciated assets, rather than gifting them, may save heirs significant capital gains tax.
• Review older documents. Formula clauses in credit shelter or bypass trusts written for lower exemptions may now push more assets than intended into those trusts, and may prevent a basis step-up at the surviving spouse's death.
• Succession planning. For owners planning a transition, the higher exemption creates more room to transfer business interests to the next generation. Valuation, timing, and structure still matter.
• Watch state estate taxes. Massachusetts taxes estates above $2 million, and several other states have exemptions well below the federal level. State planning may now be the primary concern for many clients.

How OBBBA Shapes Your 2026 Year-End Planning

With permanence comes the ability to plan over multiple years instead of racing a sunset. Before December 31, consider these steps:

• Time equipment purchases. To claim 100% bonus depreciation or Section 179 for 2026, assets must be placed in service (not just ordered) by year-end. Model whether full expensing is best, or whether spreading deductions produces a better result over several years, especially if QBI or state tax considerations apply.
• Revisit your R&D position. Confirm that 2026 research costs are being expensed under Section 174A and that any remaining 2022 through 2024 amortization is being handled in the most favorable way. Check state conformity, since some states, including New York, did not follow the federal change.
• Rethink charitable giving. Starting in 2026, itemizers can only deduct charitable gifts above 0.5% of AGI, and taxpayers in the 37% bracket see the benefit of itemized deductions capped at 35%. Non-itemizers can now take a deduction of up to $1,000 ($2,000 joint) for cash gifts. Bunching gifts or using a donor-advised fund may make more sense than giving evenly each year.
• Manage income around the SALT phase-down. If your modified AGI is near the phase-down range, timing income and deductions can preserve thousands in SALT deductions. Confirm your PTET election and estimated payments are in place.
• Prepare for 1099 and W-2 changes. Update vendor files and accounting systems for the new $2,000 1099 threshold and make sure payroll is tracking qualified tips and overtime for the new W-2 codes.
• Look at QSBS for new ventures. For C corporation stock issued after July 4, 2025, Section 1202 now allows partial exclusions after three or four years, a larger $15 million cap, and a $75 million gross asset limit. Entity choice for new ventures deserves a fresh look.
• Review estate documents and gifting. Use annual exclusion gifts, review trust formula clauses, and coordinate business succession plans with the new $15 million exemption.
• Explore employer benefits. Enhanced credits for employer-provided childcare, a permanent paid family leave credit, a higher dependent care FSA limit ($7,500), and new Trump accounts for children are all worth evaluating as part of your 2027 benefits strategy.

Plan Now, Not in April

OBBBA gave business owners something they have not had in years: a tax code with fewer expiration dates. That stability rewards proactive planning, and the decisions you make in the next ten weeks will shape your 2026 return and set the stage for 2027.

The CRR team is helping clients model equipment purchases, QBI strategies, charitable timing, and estate plans under the new rules. Contact your CRR advisor to schedule a year-end planning conversation.

This article is for general informational purposes only and does not constitute tax, legal, or accounting advice. Tax outcomes depend on your specific facts. Please consult your CRR advisor before taking action