IRS Tax Changes 2026: What US Small Businesses Must Do Now
- 100% Bonus Depreciation Is Now Permanent — and Most Small Business Owners Haven't Adjusted Their Tax Plans
- What the 2026 IRS Changes Mean for a Business Doing $200k–$2M in Annual Revenue
- Three Moves Smart Operators Are Making Right Now
- How AskBiz Flags the Tax Gaps Your Bookkeeper Misses
- Warning Signs to Watch Over the Next 30 Days
- Your Action Plan for This Week
The One Big Beautiful Bill Act, signed July 4, 2025, made 100% bonus depreciation and the 20% QBI deduction permanent — two of the biggest tax planning tools US small business owners have had in a decade. New IRS tip-reporting rules under IRC §224 kick in this year and will cost restaurants, salons, and service businesses real payroll compliance hours if they're not already tracking. Pull your depreciation schedule, fix your payroll system before Q3, and raise your mileage reimbursement rate to 72.5 cents per mile today.
- 100% Bonus Depreciation Is Now Permanent — and Most Small Business Owners Haven't Adjusted Their Tax Plans
- What the 2026 IRS Changes Mean for a Business Doing $200k–$2M in Annual Revenue
- Three Moves Smart Operators Are Making Right Now
- How AskBiz Flags the Tax Gaps Your Bookkeeper Misses
- Warning Signs to Watch Over the Next 30 Days
100% Bonus Depreciation Is Now Permanent — and Most Small Business Owners Haven't Adjusted Their Tax Plans#
The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, made 100% bonus depreciation permanent under the US tax code. That is not a temporary extension. It is a permanent feature of your depreciation strategy going forward. Before OBBBA, bonus depreciation was phasing down — 80% in 2023, 60% in 2024 — and most tax software and CPA workflows were built around those declining percentages. That math is now obsolete. Here is what changed in plain numbers: if your Austin-based HVAC company buys $120,000 in qualifying equipment in 2026 — trucks, diagnostic tools, compressors — you can deduct the full $120,000 in year one instead of spreading it across a five-to-seven-year depreciation schedule. At a 25% effective tax rate, that is a $30,000 tax reduction in the year of purchase versus roughly $4,300 per year under straight-line. That is a $25,700 cash flow difference in year one alone. The OBBBA also made the §199A Qualified Business Income (QBI) deduction permanent. The 20% pass-through deduction that was set to expire after 2025 now has no sunset. If you run an S-corp or LLC in professional services, retail, or construction, this deduction stays on the table indefinitely. A Dallas-based S-corp owner netting $400,000 in 2026 saves roughly $16,000 to $20,000 in federal taxes annually through QBI — assuming they structure compensation correctly. The IRS has not yet issued full guidance on all OBBBA provisions. Regulations will roll out through 2026. Build your tax plan now around what is confirmed, and flag open items with your CPA for updates.
What the 2026 IRS Changes Mean for a Business Doing $200k–$2M in Annual Revenue#
Three changes hit different parts of your business. Here is the founder-level translation for each. **Tip Reporting (IRC §224) — Restaurants, salons, delivery operations.** New IRS rules require detailed tip reporting directly on W-2 forms, with proper tracking of qualifying tips and overtime. This is a payroll compliance change, not a tax savings opportunity for employers. A Nashville restaurant grossing $1.2M annually with 18 tipped employees needs payroll software that correctly categorizes tip income, separates it from wages, and calculates withholding accurately. Toast and Square for Restaurants both handle this — but only if your payroll integration is configured correctly. If you are running tips through a manual spreadsheet into Gusto, that gap costs you. IRS penalty exposure for W-2 errors starts at $60 per form and scales to $310 per form for intentional disregard. **Mileage Rate — Field service, sales, delivery.** The IRS standard mileage rate rises to 72.5 cents per mile in 2026, up from 67 cents in 2024. A Chicago-based plumbing company whose four technicians each drive 18,000 business miles per year should be reimbursing $52,200 total — not $48,240 at last year's rate. That is a $3,960 difference in legitimate deductible reimbursements your business is probably underclaiming right now. **SALT Cap Increase — S-corps and partnerships in high-tax states.** The OBBBA raised and indexed the state and local tax (SALT) deduction cap through 2029. If you operate in California, New York, or New Jersey and pay state income tax on pass-through income, your tax advisor needs to revisit whether a PTET (pass-through entity tax) election still makes sense under the new cap structure. In many cases, it does. In some, the calculus shifted.
Three Moves Smart Operators Are Making Right Now#
**1. Run a depreciation audit before Q3 purchases.** Pull every asset on your depreciation schedule in QuickBooks or your accountant's files. Identify any equipment you planned to buy in Q4 2026. With 100% bonus depreciation now permanent, the timing calculus changed — buying equipment in Q3 versus Q4 can shift a significant deduction into the current tax year or defer it, depending on your income projection. A Miami-based commercial cleaning company planning to buy three new vans at $45,000 each should confirm with their CPA whether accelerating that purchase to Q3 creates a better tax outcome versus delaying. The IRS Form 4562 is where this gets reported — make sure your bookkeeper knows the rules changed. **2. Audit your payroll setup for tip compliance before your next payroll run.** Log into Gusto, ADP, or Square Payroll today and verify that tipped employees have tip income correctly categorized in the system. IRC §224 compliance requires that qualifying tips appear accurately on W-2s — your payroll provider does not automatically reconfigure this without your input. If you are on a legacy payroll system or running manual payroll, flag this as an urgent fix. A single W-2 correction filing costs $60–$310 per form plus CPA time. Fixing the setup now costs nothing. **3. Update your mileage reimbursement policy to 72.5 cents per mile and set up a mileage log.** IRS requires contemporaneous documentation — a log completed at or near the time of each trip. MileIQ, TripLog, and Everlance are the three most widely used apps among US SMB owners. At $7–$10 per month per driver, the cost is trivial against the deduction value. Update your employee handbook, send the new rate to your team this week, and make sure QuickBooks mileage categories reflect the updated rate.
How AskBiz Flags the Tax Gaps Your Bookkeeper Misses#
A founder running a three-location Atlanta salon types into AskBiz: 'Am I deducting the right mileage rate for my team, and what's my total mileage reimbursement exposure this year?' AskBiz pulls from the connected QuickBooks file and Google Sheets mileage log, cross-references the current IRS rate of 72.5 cents per mile, and returns: 'Your records show 43,200 reimbursable miles logged across four staff members year-to-date. At your current logged rate of 67 cents, you have reimbursed $28,944. At the 2026 IRS rate of 72.5 cents, the correct figure is $31,320 — a $2,376 gap in legitimate deductible business expense. Your records also show tip income tracked in your Square POS is not appearing as a separate line in your QuickBooks payroll categories, which may create a W-2 compliance issue under IRC §224.' That is two compliance flags — one dollar-quantified, one regulatory — surfaced in under 10 seconds from a plain-English question. The founder books a 20-minute call with their CPA with a specific agenda instead of a vague 'check on taxes.' AskBiz connects to Square, QuickBooks, and Google Sheets simultaneously, so that unified view exists without manual reconciliation. The Business plan at $129/month pays for itself the first time it catches a mileage gap or a W-2 exposure before the IRS does.
Warning Signs to Watch Over the Next 30 Days#
**Your payroll reports show tip income bundled into regular wages.** This is the most common IRC §224 compliance failure. Open your last three payroll reports and confirm tip income appears as a separate, labeled category. If it does not, call your payroll provider this week. **Your mileage reimbursement checks still reflect $0.67/mile.** Search your bank statement or QuickBooks for mileage reimbursements paid in 2026. If they are below $0.725/mile, you are under-deducting and potentially under-reimbursing employees. **Your CPA has not mentioned the permanent QBI deduction in your 2026 planning.** If you are running a pass-through entity netting more than $200,000 and no one has walked you through §199A structuring for 2026, that conversation is overdue. **You have major equipment purchases planned but no updated depreciation projection.** With 100% bonus depreciation now permanent, any capital expenditure plan built on 60% or 80% depreciation assumptions is using the wrong baseline.
Your Action Plan for This Week#
**Before Friday:** Email your CPA with three specific items — your planned 2026 capital purchases, your current tip-reporting payroll setup, and your QBI deduction status for this tax year. Do not wait for your year-end call. These are mid-year decisions with real dollar consequences. **Set up once:** Log into your payroll platform (Gusto at gusto.com, ADP at adp.com, or Square Payroll at squareup.com/payroll) and verify tip income is categorized separately from wages. Enable the IRS-compliant mileage tracking app of your choice for every employee who drives for business. MileIQ integrates directly with Microsoft 365; TripLog connects to QuickBooks. **Track monthly:** Total mileage reimbursed versus total miles logged, and tip income as a percentage of gross payroll. Both numbers should be visible in your QuickBooks P&L by vendor category. If they are not, that is the setup problem to fix — not the tax rule itself.
People also ask
What are the biggest IRS tax changes for small businesses in 2026?
Three changes matter most: 100% bonus depreciation is now permanent under the OBBBA, the IRS mileage rate rose to 72.5 cents per mile, and new IRC §224 rules require detailed tip reporting on W-2 forms. The §199A QBI deduction is also permanent, saving pass-through owners up to 20% on qualified business income. Smart operators are reviewing depreciation schedules and payroll setup now, not at year-end.
What is the IRS standard mileage rate for 2026?
The IRS standard mileage rate for 2026 is 72.5 cents per mile for business use, up from 67 cents in 2024. For a field service business with employees driving 50,000 combined miles annually, that is $36,250 in deductible reimbursements. IRS requires contemporaneous mileage logs — apps like MileIQ or TripLog satisfy that requirement and integrate with QuickBooks.
How do the new IRS tip reporting rules affect restaurant owners in 2026?
Under IRC §224, effective 2026, tip income must be accurately tracked and reported as a separate category on employee W-2 forms. Restaurants, salons, and any business with tipped employees need payroll systems — Toast, Square Payroll, Gusto — configured to separate tip income from regular wages. Errors cost $60–$310 per W-2 form in IRS penalties. This is a payroll compliance fix, not a tax savings opportunity for employers.
What is the §199A QBI deduction and does it still apply in 2026?
The §199A Qualified Business Income deduction allows eligible pass-through business owners — LLCs, S-corps, sole proprietors — to deduct up to 20% of qualified business income from federal taxable income. The OBBBA, signed July 4, 2025, made this deduction permanent. A pass-through owner netting $350,000 in 2026 could reduce taxable income by $70,000, saving $15,000–$21,000 in federal taxes depending on their bracket.
How does AskBiz help US small businesses track IRS compliance and tax deductions?
AskBiz connects to QuickBooks, Square, and your payroll platform, then answers plain-English questions like 'Am I claiming the right mileage rate?' or 'Is my tip income categorized correctly for W-2 reporting?' It flags compliance gaps with dollar figures — for example, identifying a $2,376 mileage under-deduction or a payroll categorization error before the IRS does. The Business plan runs $129/month.
Ben Carlson leads AskBiz's Americas strategy and founded RoG Consulting, where he spent a decade helping US main street businesses understand their numbers. He writes briefings that translate macro market shifts into decisions founders can act on before their competitors notice.
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