The One Big Beautiful Bill Act, signed July 4, 2025, changed most of the numbers small businesses and their owners plan around. This page lists what applied to 2025 returns, what is new for 2026, and the limits to update in payroll and planning. Every figure links to the IRS page it came from.
These four deductions are new for 2025 returns and run through 2028. You claim them on the new Schedule 1-A whether you itemize or not.
| Deduction | Maximum | Phases out (MAGI) | Conditions |
|---|---|---|---|
| Qualified tips | $25,000 a year | Over $150,000 ($300,000 joint) | Self-employed: capped at net income from the business. Workers in a specified service trade or business don't qualify. SSN required. |
| Qualified overtime | $12,500 ($25,000 joint) | Over $150,000 ($300,000 joint) | Only the premium part of time-and-a-half counts. SSN required, and married couples must file jointly. |
| Car loan interest | $10,000 a year | Over $100,000 ($200,000 joint) | New loan taken out after 2024, secured by a personal-use vehicle under 14,000 lb with final assembly in the US. The VIN goes on the return. Leases don't qualify. |
| Seniors 65 and over | $6,000 per person | Over $75,000 ($150,000 joint) | On top of the existing extra standard deduction for age. SSN required, and married couples must file jointly. |
Source: IRS, Working Families Tax Cuts: individuals and workers; IR-2026-02, 2026 filing season opens
OBBBA raised the 2025 standard deduction to $15,750 single, $31,500 joint and $23,625 head of household, up from the $15,000 / $30,000 / $22,500 the IRS had first announced. The 10% to 37% rate tables no longer expire, and the personal exemption stays at zero.
The cap on state and local tax deductions is $40,000 for 2025 ($20,000 married filing separately). It shrinks once modified AGI passes $500,000, but never below $10,000. For 2026 it is $40,400, shrinking above $505,000.
The credit is $2,200 per child, with up to $1,700 refundable, for both 2025 and 2026. The full credit is available up to $200,000 of income ($400,000 joint). The taxpayer (or one spouse on a joint return) and the child need a valid SSN.
Source: IRS, Child Tax Credit; Rev. Proc. 2025-32
Children who are US citizens with an SSN and born from 2025 through 2028 can get a $1,000 federal deposit. Families can add up to $5,000 a year, of which an employer can give up to $2,500. No money goes in before July 4, 2026. Parents elect on Form 4547.
The child and dependent care credit can reach 50% of expenses (from 35%), on the same $3,000 / $6,000 expense caps. People who take the standard deduction can deduct up to $1,000 ($2,000 joint) of cash gifts to charity. Repayment caps on excess premium tax credit go away.
The basic exclusion is $15,000,000 for people who die in 2026, up from $13,990,000 in 2025. The annual gift exclusion stays at $19,000.
The electric vehicle credits ended for vehicles acquired after September 30, 2025. The home energy improvement (25C) and residential clean energy (25D) credits ended after December 31, 2025.
Property acquired after January 19, 2025 can be written off in full in the year it's placed in service, with no phase-down. For the first tax year ending after that date you can elect 40% instead.
The expensing limit is $2,500,000, phasing out from $4,000,000 of purchases, for tax years beginning in 2025. For 2026 it is $2,560,000, phasing out from $4,090,000, and the SUV cap is $32,000.
US research and experimental costs can be deducted in the year paid, for tax years beginning after 2024. Research done abroad still has to be spread over 15 years. Domestic costs capitalized in 2022 to 2024 can be written off in full in the first 2025 tax year, or spread over two years. The small-business election to apply the change back to 2022 to 2024 had to be made by July 6, 2026.
Source: Rev. Proc. 2025-28 (R&E)
Depreciation, amortization and depletion are added back again when working out adjusted taxable income, so more interest is deductible. Businesses with average gross receipts of $31 million or less (2025) remain exempt.
Source: Instructions for Form 8990
The 20% qualified business income deduction continues. From 2026, anyone with at least $1,000 of QBI gets at least $400. The 2026 income thresholds are $201,750 ($403,500 joint), up from $197,300 ($394,600 joint) in 2025.
Payment apps and marketplaces only have to send a 1099-K when a seller's gross payments exceed $20,000 and the number of transactions exceeds 200. The lower thresholds that had been phasing in are gone.
For payments made in 2026 the reporting threshold is $2,000, indexed for inflation after that, so the first forms affected are the ones filed in early 2027. The $600 threshold still applies to 2025 payments. A few boxes keep their own thresholds, such as gross proceeds paid to an attorney, so check the instructions box by box.
For 2025 the IRS waived penalties on employers and payers that didn't separately report tips, the tipped occupation or qualified overtime, because the forms hadn't changed yet. That relief covered 2025 only, so payroll should track these amounts separately for 2026.
The employer-provided childcare credit rises from $150,000 to $500,000 ($600,000 for eligible small businesses) in 2026. The paid family and medical leave credit is permanent. Employer payments of an employee's student loans stay tax-free up to $5,250, now permanently.
| Item | 2025 | 2026 | Source |
|---|---|---|---|
| Standard deduction, single | $15,750 | $16,100 | IR-2025-103, 2026 inflation adjustments |
| Standard deduction, married filing jointly | $31,500 | $32,200 | IR-2025-103, 2026 inflation adjustments |
| Standard deduction, head of household | $23,625 | $24,150 | IR-2025-103, 2026 inflation adjustments |
| 37% bracket starts (single / joint) | $626,350 / $751,600 | $640,600 / $768,700 | IR-2025-103, 2026 inflation adjustments |
| SALT cap | $40,000 | $40,400 | IRS correction to the 2026 Form 1040-ES (SALT) |
| Section 179 limit / phase-out start | $2.5M / $4M | $2.56M / $4.09M | Rev. Proc. 2025-32 |
| 401(k), 403(b), 457 deferral | $23,500 | $24,500 | IR-2025-111, 2026 retirement plan limits |
| Catch-up, age 50+ | $7,500 | $8,000 | IR-2025-111, 2026 retirement plan limits |
| Catch-up, ages 60 to 63 | $11,250 | $11,250 | IR-2025-111, 2026 retirement plan limits |
| IRA contribution | $7,000 | $7,500 | IR-2025-111, 2026 retirement plan limits |
| SIMPLE deferral | $16,500 | $17,000 | IR-2025-111, 2026 retirement plan limits |
| HSA, self-only / family | $4,300 / $8,550 | $4,400 / $8,750 | Rev. Proc. 2025-19 (2026 HSA limits) |
| Annual gift exclusion | $19,000 | $19,000 | IR-2025-103, 2026 inflation adjustments |
| Estate basic exclusion | $13.99M | $15M | IR-2025-103, 2026 inflation adjustments |
The 2026 filing season for 2025 returns opened on January 26, 2026. The IRS is phasing out paper refund checks, so set up direct deposit. Brokers sent the first Form 1099-DA for 2025 digital asset sales, showing gross proceeds only; cost basis reporting starts with covered assets sold from January 1, 2026.
Source: IRS Publication 509; IR-2026-02, 2026 filing season opens; Instructions for Form 1099-DA (2025)
Most of these changes land in the books before they land on a return. HelloBooks keeps the records the new rules ask for, so your CPA isn't rebuilding them in April.
Payments you tag as 1099-eligible roll up per vendor per calendar year, and HelloBooks flags any vendor that crosses the threshold ($2,000 for payments made in 2026 onward).
Post equipment to its own asset account with the vendor bill attached, so the purchase date that decides 100% bonus depreciation is on record when your CPA asks.
Separate accounts for research wages, contractors and supplies make the domestic research deduction a report instead of a reconstruction.
For 2025 returns it is $15,750 single, $31,500 married filing jointly and $23,625 head of household. For 2026 it is $16,100, $32,200 and $24,150. The 2025 amounts are higher than the IRS first announced because the One Big Beautiful Bill Act raised them in July 2025.
On the new Schedule 1-A of Form 1040. You can claim them whether you itemize or take the standard deduction. Each one runs from 2025 through 2028 and phases out above an income limit.
For payments made in 2025, yes. For payments made from January 1, 2026, the threshold is $2,000, so the change first shows up on the forms you file in early 2027. A few boxes keep their own thresholds, so check the 1099-MISC and 1099-NEC instructions for each one.
$40,000 for 2025 and $40,400 for 2026 ($20,000 and $20,200 if married filing separately). It shrinks once modified AGI passes $500,000 for 2025 or $505,000 for 2026, but never below $10,000.
Yes, for property acquired after January 19, 2025, through 100% bonus depreciation, which no longer phases down. Section 179 is also available up to $2,500,000 for 2025 and $2,560,000 for 2026.
US research costs are deductible in the year paid for tax years beginning after 2024. Domestic costs you capitalized in 2022 to 2024 can be written off in full in your first 2025 tax year or spread over two years. Research done outside the US is still spread over 15 years.
Figures checked against IRS.gov on October 10, 2026. This page is general information, not tax advice. Rules with income tests and elections depend on your facts, so confirm with your tax adviser before you file.
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