One of the most important changes for eligible pass-through businesses is the continuation of the 20% Qualified Business Income deduction.
The provision under Section 199A has been made permanent, giving eligible business owners greater certainty when planning their federal taxes.
This may be relevant to certain sole proprietors, partnerships, S corporations and other qualifying businesses.
The IRS increased the standard business mileage rate to 72.5 cents per mile for 2026, compared with 70 cents per mile in 2025.
Businesses that use vehicles for qualifying business purposes should maintain accurate mileage records throughout the year.
Keeping a mileage log can make it easier to support deductions during tax preparation.
The 2026 rules continue to provide significant opportunities for businesses purchasing qualifying equipment and other property.
Under the updated rules, certain qualifying business property placed in service after January 19, 2025 may be eligible for 100% first-year depreciation.
This can be particularly useful for businesses investing in equipment, machinery and other qualifying assets.
Businesses with research and experimental expenses should review the updated R&E rules carefully.
The One, Big, Beautiful Bill changed how certain domestic and foreign research expenses are treated. Eligible businesses may also have options involving prior tax years, amended returns or accounting method changes.
Businesses that invest heavily in research should discuss these changes with a qualified tax professional before filing.
The limitation on excess business losses has been permanently extended and the applicable thresholds are indexed for inflation for tax years beginning after 2025.
This can be especially important for business owners who report significant losses from business activities.
For certain reportable payments made after 2025, the information reporting threshold increases to $2,000.
Small businesses should review their vendor payments and reporting procedures to determine which payments may require information returns.
Understanding small business tax deductions 2026 is important for reducing taxable business income while remaining compliant.
Depending on the business structure and circumstances, businesses may have deductions related to:
A deduction should only be claimed when the expense qualifies under applicable IRS rules and proper documentation is maintained.
The changes may be particularly relevant to:
The impact will depend on the business structure, income, expenses and applicable tax elections.
Business owners should not wait until tax filing season to review their tax position.
Start by maintaining accurate bookkeeping throughout the year. Separate personal and business expenses and keep receipts, invoices, mileage records and other supporting documents.
Businesses should also review major purchases, payroll records, contractor payments and research expenses to determine whether the 2026 rules affect their tax planning.
Working with a professional tax advisor can help identify applicable deductions and reduce the risk of filing errors.
The 2026 tax year provides several opportunities for eligible businesses, but the rules can also be complicated.
The permanent 20% QBI deduction, increased mileage rate, updated R&E treatment and enhanced depreciation provisions can all influence business tax planning.
Planning throughout the year allows business owners to make informed financial decisions instead of trying to find tax-saving opportunities after the year has already ended.
Important changes include the continuation of the 20% QBI deduction, a 72.5-cent business mileage rate, updated R&E expense rules, changes to information reporting and permanent excess business loss limitations.
Yes. The Section 199A qualified business income deduction was made permanent for eligible businesses.
The IRS standard mileage rate for business use is 72.5 cents per mile for 2026.
Certain qualifying business property may qualify for 100% first-year depreciation under the updated rules. Eligibility depends on the property and when it was placed in service.
Yes. The tax treatment of certain research and experimental expenses changed, and eligible businesses may have options for prior tax years.
Maintain accurate bookkeeping, track business expenses, document mileage, review equipment purchases and research expenses, and discuss applicable tax provisions with a qualified tax professional.