Tax planning shouldn't begin when your accountant starts preparing your return.
By then, many of the decisions that could have affected that return have already been made.
For small-business owners, 2026 is particularly important because major federal tax legislation enacted in 2025 changed or extended numerous provisions affecting businesses and their owners.
Some provisions became permanent.
Others changed beginning in 2026.
And some create planning opportunities that are worth discussing with your CPA before December 31.
Here are several of the biggest federal changes small-business owners should have on their radar.
1. The Qualified Business Income Deduction Is Now Permanent
This is a big one for many owners of pass-through businesses.
The Qualified Business Income deduction, commonly called the QBI deduction or Section 199A deduction, was originally scheduled to expire after 2025.
Instead, the new federal law made it permanent beginning in 2026. IRS
QBI can potentially allow eligible owners of pass-through businesses to deduct a portion of qualified business income on their individual tax returns, subject to numerous rules, limitations, income thresholds, business classifications, wages, property and other factors.
That can affect owners of:
S Corporations.
Partnerships.
LLCs taxed as pass-through entities.
Sole proprietorships.
For business owners, the important takeaway isn't simply:
"QBI still exists."
It's that entity structure, owner compensation, taxable income and other decisions can interact with the deduction.
A better question for your tax professional might be:
"Now that QBI is permanent, does anything about my compensation or business structure deserve another look?"
2. 100% Bonus Depreciation Is Back—and Permanent
Businesses frequently purchase equipment, machinery, technology, vehicles and other assets that normally must be depreciated over several years.
Bonus depreciation can accelerate that deduction.
The new law permanently restored 100% bonus depreciation for qualifying property acquired after January 19, 2025, subject to the applicable eligibility rules. IRS
For some businesses, that's significant.
Imagine you're considering purchasing $80,000 of qualifying equipment.
The question isn't simply:
"Can I afford it?"
You may also want to ask:
"How would purchasing this equipment this year affect my taxable income and cash flow?"
But there's an important distinction.
A tax deduction does not make an $80,000 purchase free.
You're still spending $80,000.
Tax strategy should support a good business decision—not turn a bad purchase into a good one simply because there's a deduction available.
3. Section 179 Became Much More Generous
Section 179 provides another way businesses may be able to immediately expense qualifying property.
The law increased the Section 179 expensing limit to $2.5 million, with the deduction beginning to phase down when qualifying property placed in service exceeds $4 million. Those amounts apply beginning with tax years after 2024 and are indexed for inflation after 2025. IRS
Most small businesses won't come anywhere close to those limits.
But the larger point is that businesses now have substantial tools available for accelerating deductions on qualifying investments.
Section 179 and bonus depreciation aren't identical, however.
Eligibility, taxable-income limitations, property type, state tax treatment and future depreciation all matter.
So don't simply ask:
"Can I write this off?"
Ask:
"If we're buying this anyway, what is the most appropriate depreciation strategy for our situation?"
4. Domestic Research and Development Expenses Changed Dramatically
This one can matter to more businesses than the words "research and development" might suggest.
Beginning with tax years after December 31, 2024, domestic research or experimental expenditures generally can once again be deducted in the year they're paid or incurred. Businesses can instead elect to capitalize qualifying costs and amortize them over at least 60 months. Taxpayer Advocate Service
And importantly:
Software development costs can fall under these R&E rules. Taxpayer Advocate Service
So this isn't necessarily relevant only to laboratories and pharmaceutical companies.
A business developing software, technology, products, processes or other qualifying innovations should ask its tax professional whether these rules apply.
Foreign research expenses remain subject to different treatment and generally must be capitalized and amortized over 15 years. Taxpayer Advocate Service
5. Business Interest Deduction Rules Changed
Businesses carrying meaningful debt should also pay attention to changes involving Section 163(j), which limits certain business-interest deductions.
For tax years beginning after December 31, 2024, depreciation, amortization and depletion are again added back when calculating adjusted taxable income for purposes of the limitation. IRS
That can increase the amount of business interest some taxpayers are permitted to deduct.
Additional changes apply beginning after December 31, 2025, particularly for certain businesses with international operations and capitalized interest. IRS
For a typical small business without substantial debt, this may not be the first item to discuss with a CPA.
For a highly leveraged company, real-estate-heavy business, acquisition strategy, or company carrying substantial financing, it may deserve considerably more attention.
6. The 2026 Business Mileage Rate Increased
For businesses and eligible self-employed taxpayers using the standard mileage method, the IRS increased the 2026 business mileage rate to:
72.5 cents per business mile.
That's up from 70 cents in 2025. IRS
That may sound like a minor adjustment.
But consider an owner or employee driving 20,000 qualifying business miles during the year.
At the 2026 rate, that's:
20,000 × $0.725 = $14,500
of mileage calculated under the standard mileage method, assuming those miles and the taxpayer otherwise qualify.
For service businesses, contractors, consultants, franchise operators and other companies with substantial vehicle usage, accurate mileage tracking can matter.
7. Payroll Costs Changed Too
The Social Security wage base increased to $184,500 for 2026.
The Social Security tax rate remains 6.2% for the employee and 6.2% for the employer, while Medicare remains 1.45% each with no wage-base limit. IRS
For employers with highly compensated employees—or S Corporation owners determining reasonable compensation—annual payroll changes are worth incorporating into forecasts.
This is another reason to think beyond:
"What's this employee's salary?"
The better question is:
"What is this employee's total cost to the business?"
8. New Tip and Overtime Deductions Can Affect Employees
Recent federal changes also created deductions involving certain qualified tips and overtime compensation.
The qualified-tip deduction can be as much as $25,000 annually, subject to occupation, income and other eligibility requirements.
The qualified-overtime deduction can reach $12,500 for an individual or $25,000 for joint filers, with income phaseouts applying. IRS
These are deductions for eligible taxpayers—not simply a blanket elimination of payroll or income taxes on every dollar someone labels "tips" or "overtime."
For employers, the practical issue is making sure payroll and reporting practices support the applicable requirements.
Restaurants, salons, personal-service businesses, hospitality companies and other employers with tipped employees should pay particular attention.
9. Several Energy Tax Incentives Are No Longer Available
Business owners should also be careful about relying on old tax advice surrounding electric vehicles and energy incentives.
Several federal incentives ended earlier than previously scheduled.
For example, the qualified commercial clean vehicle credit generally isn't available for vehicles acquired after September 30, 2025. Certain energy-efficient commercial-building incentives also have new termination rules. IRS
This is a good example of why tax assumptions should be verified before making a purchase.
Something that qualified for a credit a year or two ago may not qualify today.
10. Individual Tax Changes Still Matter to Business Owners
A pass-through business and its owner aren't financially isolated from one another.
Many business owners ultimately report business income on their personal returns.
For 2026, the federal standard deduction increased to:
$32,200 for married couples filing jointly.
$16,100 for single filers and married individuals filing separately.
$24,150 for heads of household. IRS
Federal income-tax brackets were also adjusted for inflation. IRS
That matters when you're estimating quarterly taxes, evaluating owner compensation, considering retirement contributions or forecasting how another $50,000 or $100,000 of business income might affect the owner's overall tax picture.
What Should Business Owners Be Watching for in 2027?
The biggest lesson heading into 2027 isn't necessarily another giant list of new tax rates.
It's that several major business provisions are now permanent, which creates a more stable planning environment.
QBI is no longer sitting on a near-term expiration date.
100% bonus depreciation is permanent for qualifying property under the new rules.
Domestic R&E treatment has materially changed.
Section 179 limits are indexed for inflation after 2025. IRS
That means 2027 planning should increasingly become less about reacting to expiring provisions and more about incorporating tax strategy into normal business planning.
There are still provisions with specific 2027 implications. For example, transition rules for Qualified Opportunity Zones change for certain property acquired after December 31, 2026, and the IRS has already issued guidance addressing that transition. IRS
And, as always, inflation adjustments, retirement-plan limits, mileage rates and other annual figures can change for 2027 once the applicable IRS guidance is released.
Don't Ask Your Accountant Only One Question
One of the least useful year-end questions a business owner can ask is:
"How much am I going to owe?"
That's important.
But it shouldn't be the only question.
Consider asking:
"Are there legitimate deductions we're missing?"
"Are there purchases we're already planning that should happen this year or next year?"
"Does 100% bonus depreciation affect any investments we're considering?"
"Does Section 179 make sense for us?"
"Could any of our development costs qualify as domestic research expenses?"
"Does our current entity structure still make sense?"
"How does my compensation affect the overall tax picture?"
"Are we taking full advantage of retirement-plan opportunities?"
"How much should we be setting aside for taxes each month?"
"What should we change now so we're better positioned in 2027?"
Those questions turn tax preparation into tax planning.
Your Tax Return Shouldn't Be the First Time You Think About Taxes
There is a big difference between preparing taxes and planning for taxes.
Preparation looks backward.
Planning looks forward.
A good business owner should have some idea of expected profit, estimated tax obligations and upcoming decisions long before the return is filed.
If you're expecting a strong year, don't wait until March or April of 2027 to discover what 2026 produced.
Review the numbers during the year.
Model different outcomes.
Set money aside.
Ask questions.
And bring those questions to a qualified tax professional while there's still time to make informed decisions.
That's part of the philosophy behind UnpackFi.
You don't need to become a CPA.
But you should understand your business well enough to know what questions are worth asking one.
Use UnpackFi to better understand your business numbers, explore what-if scenarios, and prepare better questions for the professionals you trust. Try the free demo at UnpackFi.com.
UnpackFi provides educational financial insights and business decision-support tools. It does not provide tax, legal, accounting, investment, or financial advice. Tax laws and their application vary based on individual circumstances. Consult a qualified tax professional regarding your business.