Business Tax Return Changes: 1065, 1120 and 1120-S

Business return changes: 1065, 1120 and 1120-S

For entity returns, the federal law mostly changed the deductions rather than the forms. Full expensing, immediate research deductions and a looser interest limit move taxable income, and the new K-1 codes pass those results to owners. Start with the return type, then work through the provisions behind it.

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Entity due dates in 2026

Calendar-year partnership, S corporation and C corporation dates from IRS Publication 509.

Due date	What is due
March 16, 2026	Partnership (1065) and S corporation (1120-S) returns and K-1s (March 15 fell on a Sunday)
April 15, 2026	Individual (1040) and calendar-year C corporation (1120) returns; first 2026 estimated payment
September 15, 2026	Extended 1065 and 1120-S returns; third 2026 estimated payment
October 15, 2026	Extended 1040 and 1120 returns

From IRS.gov, checked October 10, 2026.

The pages in this section

22 pages, grouped for review.

By return

Form 1065 and Schedule K-1 changes for 2025New K-1 codes: 13X, 20AZ, 20ZZ
Form 1120 changes for 2025Minimum late-filing penalty (over 60 days): $525
Form 1120-S and Schedule K-1 changes for 2025New line 17d codes: BA and ZZ

Provisions that change business taxable income

Bonus depreciation is back at 100%, and Section 179 doubledBonus depreciation: 100%
Domestic research costs are deductible againDomestic R&E: Deduct in year paid
The business interest limit goes back to an EBITDA baseSmall business exemption (2025 gross receipts test): $31 million
The QBI deduction after OBBBA: what changes on Form 8995Minimum deduction from 2026: $400
ERC claims for late 2021 filed after January 2024 are barredLate claim cut-off: Filed after January 31, 2024
The employer childcare credit (45F) gets a much higher capMaximum credit from 2026: $500,000
The paid family and medical leave credit is permanent and widerCredit rate: 12.5% to 25% of leave wages
Opportunity Zones 2.0: a permanent program with new mapsNew zones take effect: January 1, 2027
The 1% remittance transfer taxTax rate: 1% of the transfer
The excess business loss limit for 20262026 threshold: $256,000

Supporting forms

Form 4562 changes for 2025, and what the 2026 draft addsSection 179 limit, 2025: $2,500,000
Form 6765: Section G becomes required after 2025Section G required for tax years beginning: After 2025
Form 3800 changes for 2025: transfer elections move onto the formNew on page 1: Item B, transfer elections
Forms 8995 and 8995-A: what changed for 2025Form 8995 threshold, joint: $394,600
Form 8995 for 2026: a new line for the minimum deductionMinimum QBI deduction from 2026: $400

By owner and entity type

Tax return changes for S corporation ownersQBI threshold 2026 (joint): $403,500
Tax return changes for partnerships and multi-member LLCsInterest limit base: EBITDA from 2025
Tax return changes for startups and R&D companiesDomestic research costs: Deductible in the year paid
Tax return changes for manufacturersSection 179 limit 2025: $2,500,000

Close-out work for entity clients

Entity returns depend on a trial balance that already reflects these elections, so the work starts at year-end close rather than at return prep.

Tag each asset with its acquisition date and whether it was bought under a binding contract.
Separate domestic and foreign research costs in the general ledger.
Recompute adjusted taxable income for the interest limit with depreciation and amortization added back.
Agree with owners which elections to make before the K-1s go out.

What owners will ask about

Owners see the effect on their K-1 and their own return, not on the entity return. A one-page note on the bonus and research changes, sent with the K-1, saves a round of calls in March.

Frequently asked questions

Does the 1120-S have its own changes this year?

Yes. The S corporation page covers the new line 17d codes on Schedule K-1 and the direct deposit fields, along with the shared depreciation and research changes.

Where are sole proprietors covered?

Schedule C changes are on the form pages and the 2025 hub, since a sole proprietor files on Form 1040.

Business return changes: 1065, 1120 and 1120-S

Entity due dates in 2026

The pages in this section

Close-out work for entity clients

What owners will ask about

Frequently asked questions

Keep exploring

Sources

Start automating your books today

Business return changes: 1065, 1120 and 1120-S

Entity due dates in 2026

The pages in this section

Close-out work for entity clients

What owners will ask about

Frequently asked questions

Keep exploring

Sources

Start automating your books today

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