JCB Financial Services shares key 2026 tax developments for US small businesses to stay informed amid inflation adjustments and evolving IRS rules. This overview highlights notable provisions without constituting personalized advice.
Notable 2026 Tax Updates
IRS income brackets increase by approximately 2.8% for 2026, raising the standard deduction to around $15,000 for singles and $30,000 for married filing jointly. Section 179 expensing allows up to $1.22 million in immediate deductions for qualifying property, phasing out above $3.05 million in purchases. The Qualified Business Income (QBI) deduction remains at 20% for pass-through entities, with phase-out thresholds at $197,000 single/$394,000 joint.
Section 179 and Bonus Depreciation Facts
Section 179 covers equipment, vehicles under 6,000 lbs GVWR, and certain software for full expensing in the year placed in service. Bonus depreciation steps down to 20% in 2026 from prior higher rates. These provisions enable significant upfront write-offs for eligible assets.
Available Business Credits
Research and Development (R&D) credits offset up to 20% of qualified expenses tied to process or product improvements. Work Opportunity Tax Credit ranges from $2,400 to $9,600 per hire from designated groups. Employee Retention Credit claims may still apply for certain 2025 periods.
Retirement Contribution Limits
401(k) employee deferrals reach $23,500, plus $7,000 catch-up for those over 50, with total defined contribution limits at $70,000. SEP-IRAs permit deductions up to 25% of compensation. Cash balance plans offer additional capacity for higher-income owners.
QBI Deduction Mechanics
The 20% QBI deduction applies to qualified income, subject to wage tests (50% of W-2 wages) or asset tests (25% wages + 2.5% depreciable property). Specified Service Trade or Businesses (SSTBs) face limitations above phase-out levels.
QuickBooks for Financial Tracking
New to QuickBooks? The platform supports bank integrations, categorized expense tracking, and Profit & Loss reports aligned with IRS schedules. Self-Employed or Plus editions suit small operations for ongoing financial visibility.
QuickBooks Basics
- Access via quickbooks.intuit.com and select an edition.
- Link bank and credit card accounts for transaction imports.
- Use pre-built categories matching common deductions like travel or supplies.
- Reconcile accounts monthly and track sales tax.
- Connect apps for 1099 forms and projections.
Year-End Considerations
Common tracking elements include mileage at the 70 cents per mile standard rate, home office space up to 300 sq ft under the simplified $5 per sq ft method, and loss offsets up to $600,000 against ordinary income. IRA contributions for 2026 can occur through April 2027.
FAQ
What are the 2026 standard deduction amounts?
Approximately $15,000 single/$30,000 married filing jointly, indexed for inflation.
How much can be expensed under Section 179?
Up to $1.22 million, with phase-out starting at $3.05 million in purchases.
When does bonus depreciation apply?
At 20% for qualifying property placed in service in 2026.
What tests apply to the full QBI deduction?
W-2 wages (50% of QBI) or wages plus asset basis (25% + 2.5%).
Does QuickBooks prepare tax forms?
It organizes data for Schedule C and 1099s but does not file returns.
Stay Informed with JCB Financial Services
For detailed insights on these 2026 provisions, contact JCB Financial Services at +1 800 284 2999 schedule a no-obligation discussion today.