The 2026 tax year has arrived with some of the most significant legislative shifts we’ve seen in a decade. For small business owners and pass-through entities, the passage of the One Big Beautiful Bill (OBBB) Act has replaced several expiring provisions with permanent rules.
1. The 20% QBI Deduction is Now Permanent
One of the biggest concerns for S-corps and Partnerships was the expiration of the Section 199A deduction. The OBBB Act has made the 20% Qualified Business Income (QBI) deduction permanent, allowing eligible owners to continue deducting up to 20% of their business income.
2. Restoration of 100% Bonus Depreciation
In a major win for capital-intensive businesses, 100% Bonus Depreciation has been restored. If you are planning to purchase machinery or equipment this year, you can once again deduct the full cost in the year of purchase.
3. New Deductions for Overtime
New rules now allow for specific deductions on qualified overtime pay, designed to keep more money in the pockets of the workforce, though this requires rigorous payroll tracking to claim correctly.