For the past several years, business tax planning has come with a recurring question: Will this provision still be around next year?
For several important tax rules, there is now more certainty. The qualified business income deduction and 100% bonus depreciation are no longer approaching scheduled end dates, while domestic research costs are generally deductible again.
That changes the conversation.
Business owners can spend less time planning around an approaching tax cliff, and more time asking whether their current structure and tax strategy still make sense for where the business is headed.
QBI Is Now a Longer-Term Planning Consideration
The qualified business income (QBI) deduction under Section 199A is now permanent under current law.
Eligible business owners may generally deduct up to 20% of qualified business income, subject to income thresholds and other limitations.
For some businesses, the calculation itself may not be what deserves the most attention. The bigger opportunity may be revisiting decisions made when QBI was expected to expire.
A sole proprietor, for example, may have previously decided that converting to an S corporation was not worth the added complexity. An S corporation may not have revisited owner compensation in several years. Businesses with multiple lines of activity may have classifications that deserve another look.
Those decisions may look different now.
That does not mean changing an entity or compensation structure simply to increase QBI. Entity choice can affect payroll and self-employment taxes, retirement plans, state taxes, administrative costs and other parts of the business.
The best QBI answer is not always the best overall answer.
Businesses With Multiple Activities May Want a Closer Look
QBI becomes more complicated for specified service trades or businesses, commonly known as SSTBs.
These businesses face additional limitations once an owner’s taxable income reaches certain levels. But the name attached to a company does not always tell the whole story.
Some businesses have genuinely different lines of activity. For example, a professional practice might operate an SSTB while also operating a separate business activity that falls outside the SSTB rules. However, common-ownership and related-party rules can cause an activity serving an SSTB to be treated as part of the SSTB.
The underlying facts matter.
Contracts, pricing, employees, customers, revenue streams, books and records, and how the business operates can all be relevant. Simply moving an activity into another entity does not change what that activity is.
With QBI now permanent, businesses with multiple service lines have more reason to determine whether the classification of each trade or business still reflects how the company operates.
100% Bonus Depreciation Provides More Certainty
Businesses planning equipment purchases and other capital investments also have a more predictable baseline.
Under current law, 100% bonus depreciation is generally available for qualifying property acquired and placed in service after January 19, 2025.
Section 179 provides another option. For 2026, businesses may expense up to $2.56 million of qualifying property, subject to the taxable income limitation, with the deduction beginning to phase out when qualifying property placed in service exceeds $4.09 million.
Having both available creates flexibility. It does not necessarily mean taking the largest possible deduction every year.
Current and future taxable income, owner basis, state tax treatment, financing arrangements, financial statements and future capital spending can all affect the answer.
Sometimes taking the deduction immediately makes sense. Sometimes preserving deductions for future years produces a better result.
Domestic Research Costs Are Deductible Again
Businesses investing in research, product development, software development or other qualifying activities have another significant change to work through.
For tax years beginning after 2024, domestic research and experimental expenditures are generally deductible under Section 174A. Businesses may instead elect to capitalize and amortize eligible costs over at least 60 months, beginning when the benefits are first realized.
For many companies, however, the current year’s spending is only part of the story.
Domestic research costs paid or incurred in tax years beginning after 2021 and before 2025 generally had to be capitalized and amortized over five years. Transition rules may allow the remaining unamortized balance to be deducted in the first tax year beginning after 2024 or ratably over the first two such tax years.
Accounting methods, research credits, state conformity, and financial reporting can all come into play.
If research is a meaningful part of your business, this is a good year to make sure the treatment on your tax return reflects a deliberate decision rather than simply carrying forward what was done last year.
Financing Decisions Should Include the Interest Deduction
Businesses with significant debt should also revisit Section 163(j), which can limit business interest deductions.
For tax years beginning in 2026, the inflation-adjusted small-business gross receipts threshold is $32 million, generally measured using average annual gross receipts for the prior three years and subject to aggregation and tax-shelter rules. For tax years beginning after 2024, depreciation, amortization, and depletion are again added back in calculating adjusted taxable income, which may allow some businesses to deduct more interest.
This can matter when financing an acquisition, expansion, or major capital investment.
Ideally, interest deductibility should be part of the financing conversation before the transaction is completed, along with interest rates, cash flow, loan terms, and the company’s broader capital needs.
Employers Should Revisit Paid Family and Medical Leave
The federal tax credit for paid family and medical leave is now permanent and has been expanded.
Beginning in 2026, employers may calculate the credit using either wages paid during qualifying leave or qualifying paid family and medical leave insurance premiums. Eligibility also expanded to employees with at least six months of service and to part-time employees customarily working 20 hours or more per week.
For employers already providing paid leave, this is worth reviewing. A benefit the company already offers may have a tax consequence that was not considered when the policy was designed.
As with other employer tax incentives, however, the tax credit should not drive the benefit strategy itself. Workforce needs, employee retention, cost, and administration still matter.
Energy Incentives Have Become More Date-Sensitive
The energy credit landscape has changed significantly, and several incentives have already ended.
Clean vehicle credits generally are unavailable for vehicles acquired after September 30, 2025. The principal residential energy credits generally are unavailable for property placed in service, or expenditures treated as made, after 2025. Other business and real estate incentives have their own construction-start and placed-in-service deadlines.
For businesses involved in energy projects, construction, or major capital investments, documentation is increasingly important.
Contracts, invoices, acquisition dates, construction records and evidence showing when property was placed in service can determine whether a credit or deduction remains available.
A project that qualifies on a 2026 tax return may involve an incentive that is no longer available for a similar project started today. That makes the underlying dates just as important as the expenditure itself.
What Should Business Owners Revisit?
More certainty in the tax law does not mean your business needs to change anything.
It means some decisions may now be worth another look.
Entity structure, owner compensation, QBI, equipment purchases, depreciation, research spending, financing and state tax treatment are all areas where assumptions made a few years ago may no longer produce the same answer today.
The point is not to restructure a business or accelerate spending because a tax provision permits or rewards that action.
It is to ask whether decisions made under an older set of assumptions still make sense for where the business is going.
If you are making decisions about your business structure, capital spending, financing, or other significant investments, contact your YHB advisor. We can help you consider the tax impact alongside the financial and operational factors that should drive the decision.