Tax Return Changes for Partnerships and LLCs | HelloBooks Business interest at the partnership level, bonus depreciation, QBI and the loss limit for partners. What partnership and LLC clients need for 2026.
Partnership returns pass most of the new rules to partners, but some limits are applied at the entity first. Getting the order right is the work.
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Interest limit base
EBITDA from 2025
Applies: Tax years 2025 and 2026From IRS.gov · checked October 10, 2026
The business interest limit is applied at the partnership level, now with depreciation and amortization added back, and excess business interest passes to partners. Bonus depreciation at 100% flows through to partners, who then apply their own excess business loss limit.
Partners with QBI benefit from the continued deduction and, from 2026, the $400 minimum for those with at least $1,000 of QBI.
Track each partner’s capital account, contributions and distributions in their own equity accounts. Keep loan interest separate so the Form 8990 figures can be produced at entity level without reworking the ledger.
The plain-English summary for business owners
Business returns · Form 8990
Business returns · Form 8995
By client type · S corporation owners
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
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