OBBBA Year-Two Moves for Business Owners

Last summer, one of my clients — a marketing consultant running her practice as an S-corp — asked me a question I still think about: “Chris, is this new tax law actually going to change anything for me, or is it just noise?”

A year later, I have a real answer. And for a lot of small business owners, it’s genuinely good news — but only if you act on it before December 31st instead of discovering it in April.

The One Big Beautiful Bill Act (OBBBA) is no longer theoretical. Its provisions are live for the 2026 tax year, and several of them create real, quantifiable savings for solopreneurs and small business owners. Here’s what matters most.

1) The QBI deduction is now permanent — and the phase-in range just got wider.

The 20% Qualified Business Income deduction under Section 199A was scheduled to disappear after 2025. It didn’t. OBBBA made it permanent, which matters more than it sounds — it means you can finally build multi-year tax strategy around this deduction instead of planning around its expiration.

On top of that, the phase-in range for specified service businesses (consulting, accounting, law, financial services, health) widened significantly. For 2026, the range moved to $201,750–$276,750 for single filers, and double that for joint filers. If you’re an S-corp owner with income near these thresholds, strategic moves — maximizing retirement contributions, timing expenses, adjusting your reasonable salary — can preserve more of this deduction than you’d get by doing nothing.

2) Bonus depreciation and Section 179 are both back to full strength.

If you’ve been putting off equipment purchases, software investments, or vehicle upgrades because the tax benefit didn’t seem worth it, that calculus changed. Section 179 expensing now covers up to $2.5 million (up from $1.25 million), phasing out at $4 million in total purchases. And 100% bonus depreciation is restored for qualifying assets — meaning you can deduct the full cost in the year you place the asset in service, rather than depreciating it over several years.

For a business owner planning a year-end equipment purchase, that’s the difference between a modest deduction this year and a full write-off.

3) The SALT cap workaround is still very much alive.

For California business owners, this is often the single biggest lever. The federal SALT deduction cap increased from $10,000 to $40,000 under OBBBA (phasing down for high earners, reverting to $10,000 in 2030). But even with that increase, the Pass-Through Entity elective tax — where your S-corp or partnership pays California’s 9.3% tax at the entity level and you receive a dollar-for-dollar state tax credit — remains one of the most effective ways to work around SALT limitations entirely. If you haven’t reevaluated your PTE election this year in light of the new federal cap, it’s worth a second look before your June and December payment deadlines.

4) R&D expensing is immediately deductible again.

If your business develops software, products, or internal processes, domestic research and development costs are once again deductible in the year incurred, rather than amortized over five years. This is a meaningful cash flow improvement for any business investing in its own systems or product development.

What this means for you before year-end:

If you’re an S-corp owner near the QBI phase-in thresholds, this is the moment to revisit your compensation and retirement contribution strategy. If you’ve been deferring equipment or software purchases, the expanded Section 179 and bonus depreciation rules may make 2026 the right year to buy. If you haven’t reevaluated your California PTE election since the new SALT cap took effect, it’s worth revisiting — the math may have changed in your favor.

The theme across all of this: the biggest tax law in years didn’t just adjust a few numbers. It created a genuinely more favorable — and more permanent — environment for small business owners who plan ahead of December 31st rather than reacting to it in April.

That’s the difference between tax planning and tax preparation. One saves you money. The other just documents what you already lost.

If you haven’t reviewed how OBBBA’s 2026 provisions apply to your specific business structure, let’s talk before year-end planning windows close. Click Book A Meeting.

FAQ: OBBBA Tax Changes for Business Owners in 2026

1. Is the 20% QBI deduction permanent now?

Yes. The Qualified Business Income deduction under Section 199A was originally scheduled to expire after 2025, but the One Big Beautiful Bill Act (OBBBA) made it permanent. This allows business owners to build multi-year tax strategy around the deduction rather than planning around an expiration date.

2. What are the new QBI phase-in income thresholds for 2026?

For specified service businesses — including consulting, accounting, law, financial services, and health — the QBI phase-in range widened significantly under OBBBA. For 2026, the range moved to $201,750–$276,750 for single filers, and double that for joint filers. Business owners with income near these thresholds may be able to preserve more of the deduction through strategic moves like adjusting retirement contributions or reasonable salary.

3. How much can I expense under Section 179 in 2026?

OBBBA doubled Section 179 expensing to up to $2.5 million, up from $1.25 million previously, with the deduction phasing out once total qualifying purchases reach $4 million. This allows business owners to fully deduct qualifying equipment, software, and vehicle purchases in the year they're placed in service.

4. Is 100% bonus depreciation back for 2026?

Yes. OBBBA restored 100% bonus depreciation for qualifying assets, meaning a business can deduct the full cost of an eligible purchase in the year it's placed in service rather than depreciating it gradually over several years.

5. What is the new federal SALT deduction cap under OBBBA?

OBBBA raised the federal SALT (state and local tax) deduction cap from $10,000 to $40,000, with the higher cap phasing down for high earners and reverting back to $10,000 in 2030. This is a temporary increase, not a permanent one.

6. Does the California Pass-Through Entity (PTE) tax election still make sense after the new SALT cap?

For many California business owners, yes. Even with the increased $40,000 federal SALT cap, the Pass-Through Entity elective tax — where an S-corp or partnership pays California's 9.3% tax at the entity level and the owner receives a dollar-for-dollar state tax credit — often remains one of the most effective ways to work around SALT limitations entirely. Business owners who haven't reevaluated their PTE election since the new cap took effect may find the math has shifted in their favor.

7. Can I deduct R&D expenses immediately again under OBBBA?

Yes. OBBBA restored immediate deductibility for domestic research and development costs, reversing a prior requirement to amortize those costs over five years. This is a meaningful cash flow improvement for businesses that invest in developing software, products, or internal systems.

8. What year-end tax moves should business owners consider under the new OBBBA rules?

Three areas are worth reviewing before December 31st: whether compensation and retirement contribution strategy should be adjusted for owners near the QBI phase-in thresholds, whether deferred equipment or software purchases should be made in 2026 to take advantage of expanded Section 179 and bonus depreciation, and whether a California PTE election should be reevaluated given the new federal SALT cap.