2026 Tax Changes Affecting Businesses
Business-related changes going into effect this year include:
Expansion of the income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in. Under the OBBBA, for 2026 and beyond, instead of the distance from the bottom of the range (the threshold) to the top (the amount at which the limit fully applies) being $50,000, or, for joint filers, $100,000, it’s $75,000, or, for joint filers, $150,000. This will allow larger deductions for some taxpayers.
For 2026, the ranges are $201,750–$276,750 (up from $197,300–$247,300 for 2025), double those amounts for married couples filing jointly. The threshold amounts will continue to be annually adjusted for inflation.
Consider the potential impact of the limit phase-ins on your 2026 QBI deduction. There may be steps you can take to make the most of the significantly expanded phase-in ranges.
Reduction of the threshold for the excess business loss limitation. The deductions for current-year business losses incurred by noncorporate taxpayers generally can offset income from other sources, such as salary, self-employment income, interest, dividends and capital gains, only up to the annual limit. “Excess” losses are carried forward to later tax years and can then be deducted under the net operating loss rules.
The OBBBA makes the limit permanent and reduces the threshold at which the limitation goes into effect. For 2026, the threshold is $256,000 (down from $313,000 for 2025), double that amount for joint filers. The threshold will be adjusted for inflation annually going forward.
New option for claiming the family and medical leave credit. The OBBBA permanently extended the employer tax credit for paid family and medical leave, which was scheduled to expire on December 31, 2025. For 2025, the credit amount ranged from 12.5% to 25% of eligible wages paid to qualifying employees for up to 12 weeks of paid leave.
Beginning in 2026, the OBBBA allows employers to claim the credit for the same percentage of insurance premiums paid or incurred during the tax year for active family and medical leave coverage. You can’t claim the credit for both wages and premiums, however.
If you don’t currently offer paid family and medical leave, consider whether funding it with insurance premiums eligible for the credit would make doing so feasible while helping to achieve other business goals, such as increasing employee retention. If you do offer paid family and medical leave, you’ll need to look at whether claiming the credit for actual wages paid to employees on leave or for insurance premiums will save you more tax.
Elimination of certain clean energy incentives. The Section 179D deduction for energy-efficient commercial buildings allows owners of new or existing commercial buildings to immediately deduct the cost of certain energy-efficient improvements rather than depreciate them over the 39-year period that typically applies. The base deduction is calculated using a sliding scale, ranging for 2026 from $0.59 per square foot to $5.94 per square foot, depending on energy savings and whether specific prevailing wage and apprenticeship requirements have been met. The OBBBA eliminates the deduction for property that begins construction after June 30, 2026.
The Section 30C alternative fuel vehicle refueling property credit is for property that stores or dispenses clean-burning fuel or recharges electric vehicles. The credit is worth up to $100,000 per item (each charging port, fuel dispenser or storage property). The OBBBA eliminates the credit for property placed in service after June 30, 2026.
If you’re considering one of these clean energy investments, you may want to act soon so you can be eligible for the associated tax break before it’s eliminated.
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