Why year-end 2026 matters
2026 is the first full tax year under the One Big Beautiful Bill Act, signed in July 2025, and several of its biggest breaks for small businesses are now permanent. Texas also added a large new property tax exemption for business equipment and inventory this year.
The catch: most of these benefits only count if you act before December 31. Here is what changed, what it can save you, and what to do in the next 60 days.
7 federal changes that matter for your 2026 return
| Change | What it means for 2026 | Who benefits |
|---|---|---|
| 100% bonus depreciation, now permanent | Deduct the full cost of qualifying equipment, vehicles and software placed in service after January 19, 2025 | Any business buying equipment |
| Section 179 limit of $2,560,000 | Expense up to $2.56M of qualifying property; the limit starts phasing out above $4,090,000 of purchases | Small and mid-size businesses |
| 20% QBI deduction, now permanent | Owners of LLCs, S-corps and sole proprietorships keep the 20% deduction on qualified business income; the full deduction applies below $201,750 of taxable income ($403,500 joint) | Pass-through owners |
| Research costs deductible again | U.S. research and software development costs can be deducted in the year paid instead of over 5 years; small businesses may be able to amend 2022–2024 returns | Tech, engineering, product companies |
| 1099-NEC and 1099-MISC threshold rises to $2,000 | For payments made in 2026, you file a 1099 only when you pay a contractor $2,000 or more (was $600) | Anyone who pays contractors |
| SALT deduction cap of $40,400 | Itemizers can deduct up to $40,400 of state and local taxes in 2026, reduced for incomes above $505,000 | Owners who itemize, including property taxes |
| New employer childcare credit | Small businesses can claim 50% of qualified childcare costs, up to $600,000 a year | Employers who help staff with childcare |
The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. Employees may also deduct up to $25,000 of qualified tips and up to $12,500 of overtime pay ($25,000 joint) through 2028, which affects how you report wages on W-2s.
What’s coming for 2027
The IRS usually announces next year’s inflation adjustments in October or November, and the 2027 figures were not yet official when this post was written. Early projections point to brackets rising about 3.2%, with the standard deduction near $16,600 for single filers and $33,200 for married couples. We will update this post when the IRS releases the official numbers.
Key upcoming deadlines:
| Date | Deadline |
|---|---|
| December 31, 2026 | Last day to place equipment in service, pay deductible expenses or make 2026 retirement plan decisions |
| January 15, 2027 | Fourth-quarter 2026 estimated tax payment |
| February 1, 2027 | W-2s and 1099-NEC due to workers and the IRS (January 31 falls on a Sunday) |
| March 15, 2027 | Partnership and S-corp returns due |
| April 15, 2027 | Individual and C-corp returns due |
| May 17, 2027 | Texas franchise tax report and Public or Owner Information Report due (May 15 falls on a Saturday) |
Texas updates
$125,000 business personal property exemption. Texas voters approved Proposition 9 in November 2025. Starting with the 2026 tax year, the first $125,000 of a business’s equipment, furniture and inventory is exempt from local property tax, up from $2,500. Many small businesses will owe nothing on business personal property, though your appraisal district may still ask for a rendition or report each year.
Franchise tax. For reports due in 2026 and 2027, businesses with total revenue of $2,650,000 or less owe no franchise tax. They still must file a Public Information Report or Owner Information Report by the due date. Above the threshold, rates are 0.375% for retail and wholesale and 0.75% for most other businesses.
Bonus depreciation now applies in Texas too. The Comptroller now follows the federal 100% bonus depreciation rules for assets acquired after January 19, 2025, which can lower franchise tax for businesses that use the cost-of-goods-sold method.
New Texas R&D credit. A new franchise tax credit for qualified research took effect January 1, 2026, and it can be refundable for businesses that owe no franchise tax.
Your year-end checklist
- Buy and install equipment before December 31. To deduct it on your 2026 return, it must be placed in service this year, not just ordered.
- Review your contractor list. Collect a W-9 from everyone you paid in 2026, and note who crossed the new $2,000 threshold.
- Check your QBI position. If your income is near $201,750 ($403,500 joint), the timing of income and expenses can change your deduction.
- Look back at research costs. If you capitalized software or product development costs in 2022–2024, ask whether amending those returns makes sense.
- Confirm your property tax filing. Check with your county appraisal district whether you still need to file a rendition under the $125,000 exemption.
- Make your fourth-quarter estimated payment by January 15, 2027.
- Get your payroll ready for W-2 season. Tips and overtime now need to be tracked correctly so employees can claim their new deductions.
How Texas FinServ can help
Our Plano team prepares individual and business tax returns, runs payroll and files 1099s and W-2s, keeps your books ready for year-end, and handles Texas franchise tax reports. We can review your 2026 numbers now so you know which of these changes apply to you before the year closes.
We are always here to help or guide you. Call us at (833) 786-1110 or contact us to book a free 30-minute consultation.
This article is general information, not tax, legal or financial advice for your situation. Tax laws and IRS figures change; talk with us or another qualified professional before acting.
