Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OBBBA) (Public Law 119-21) includes wide-ranging tax changes that may call for some significant adjustments in how you plan for taxes in 2026.
In particular, the bill reshapes State and Local Taxes (SALT) deductions, the standard deduction, and new write-off allowances for some expenses. Whether you’re a business owner managing growth and compliance or an advisor/CPA guiding clients through multi‑state complexity, these are the 12 highest‑impact moves we’re seeing for 2026.
A Quick Baselines to Anchor Your Projections
Consider these baseline deductions to help determine if you should itemize or take the standard deduction for the 2026 tax year. Business owners especially should consider the new SALT deductions when deciding whether to employ the Pass-Through Entity Tax (PTET) strategy.
- The 2026 standard deduction (inflation adjusted) is set at $16,100 for single filers, $32,200 for married couples, and $24,150 for head of household.
- The OBBBA raised the SALT cap to $40,000 in 2025 and provides for 1% increases each year through 2029, setting the 2026 cap at $40,400. The cap drops back to its previous level of $10,000 in 2030. The deduction is phased down for high-income filers but won’t dip below the pre-OBBBA deduction.
1. Rebuild Your SALT Strategy and Model PTET/PTE Elections
The SALT deduction was quadrupled with the passing of the OBBBA, meaning that taxpayers who in the past took the standard deduction should not assume that should be this year’s course of action.
While the higher SALT cap will benefit many taxpayers in 2026, it is significantly reduced for those whose modified adjusted gross income is above $500,500, or $250,250 for married person filing separately.
For Business Owners:
If you’re near the itemize/standard‑deduction line, run both scenarios. The OBBBA’s higher standard deduction can reduce the value of itemizing in 2026. If you’re in a high‑tax state, you may still need a plan for SALT amounts that exceed the cap.
For Advisors and CPAs:
Reevaluate PTET/PTE elections for S Corporations and Partnerships. IRS guidance (and related practitioner analysis) continues to support entity‑level deductibility for qualifying PTET payments in many cases, which can reduce federal taxable income flowing to owners outside the individual SALT limitation. Remember that rules vary from state to state.
Model credit mechanics, resident/nonresident treatment, composite return interactions, and payment timing across all filing states.
2. Review and Strategize Withholding and Estimated Payments
Tax changes enacted by the OBBBA began in mid-2025, meaning that many taxpayers will experience discrepancies between what their payroll department withheld from taxes and what the new law now allows. This can lead to underpayment penalties or unnecessary cash drag.
For Business Owners:
If you had a big change in 2025 change, such as an income spike, new state footprint, or entity restructure, assume your 2026 withholding may be wrong until proven otherwise.
For Advisors and CPAs:
Align owner estimates to safe harbor strategy and expected K‑1 volatility; this is especially important for pass‑through owners whose taxable income doesn’t behave like a steady W‑2.
If clients are eligible for OBBBA’s temporary above‑the‑line deductions, confirm payroll and reporting inputs are being tracked correctly for 2026 reporting updates.
3. Harvest Losses and Time Gains around Brackets
Even when “rates” don’t change, thresholds and surtaxes can make gain/loss timing one of the simplest high‑impact levers. Make smart decisions with gains and losses for a higher return on your investment.
For Business Owners:
If you’re considering a distribution, recap, or partial exit, coordinate the timing with other tax moves, such as charitable planning, retirement, or entity‑level deductions.
For Advisors and CPAs:
Proactively manage capital gains recognition in years where deductions, credits, or lower taxable income bands can be intentionally “filled.”
4. Understand Opportunity Zones 1.0 vs 2.0
The Opportunity Zone, a federal tax incentive program designed to generate private investment in low-income communities, was made permanent under the OBBBA, which introduced extensive post-2026 rules known as “OZ 2.0.” Those rules include a rolling deferral date for certain investments made on or after Jan. 1, 2027, with recognition generally five years after the investment date. At the same time, existing deferrals under pre-2027 rules generally recognize no later than Dec. 31, 2026.
For Business Owners:
If you have deferred gain exposure tied to OZ 1.0, plan liquidity for the upcoming recognition timing.
For Advisors and CPAs:
Be precise about the 180‑day investment window triggers, especially for pass‑through gains, and avoid “entity engineering” without specialized review.
5. Build a Tax-Efficient Retirement “Asset Location” Plan
The OBBBA creates opportunities for you to locate your assets in the most advantageous types of account, going beyond simple allocation.
For Business Owners:
Business owners often have concentrated, illiquid wealth. That makes it important to coordinate retirement contributions, distributions, and liquidity events so you don’t accidentally stack income into the worst tax year.
For Advisors and CPAs:
Layer RMD forecasts, Social Security timing, and portfolio tax characteristics into a multi-year projection.
6. Employ Roth Conversions as a Multi-Year Bracket Tool
With lower tax rates of the OBBBA now permanent, focus on spreading your conversions out over several years.
For Business Owners:
If your income between 2026 and 2028 may decrease due to retirement, sale timing, or another reason, partial Roth conversions can reduce future RMD pressure.
For Advisors and CPAs:
Model conversions against projected K-1 income, business expansion, and depreciation timing. This is especially important for owners with variable pass-through results.
7. Examine Accounting Methods and “Timing Levers”
Rules for accounting methods have changed and limits for timing levers are expanded under the OBBBA, meaning that owners can often win big. Accounting method choices determine when income and deductions hit, which often is more impactful than marginal rates for growing businesses.
For Business Owners:
If revenue or complexity has changed, revisit cash vs. accrual eligibility, inventory treatment, capitalization policies, repair vs. improvement classification, and year‑end accrual strategy.
For Advisors and CPAs:
Coordinate timing levers with owner‑level forecasts, including SALT/PTET posture, charitable planning, and retirement contributions.
8. Take Advantage of Charitable Planning Changes
Beginning in 2026, the OBBBA changes charitable deduction mechanics in ways that may alter what you consider to be the best strategy. Consider that non-itemizers can deduct cash charitable contributions up to $2,000 if married filing jointly or $1,000 if single.
Those who itemize will most likely be looking at a 0.5% adjusted gross income floor before charitable donations become deductible, while high earners in the top tax bracket (39.6%) may see their itemized deductions capped at the 35% bracket rate.
Also, consider your business entity structure when giving, as some donations offer greater tax advantages when given at the owner level, while others are more beneficial when tied into business objectives and exit planning.
For Business Owners:
When appropriate, donating appreciated securities can reduce embedded gains and support itemizing strategies.
For Advisors and CPAs:
Consider bunching strategies and donor‑advised funds for clients who want multi‑year giving with controlled grant timing.
9. Stress-Test Your Entity Structure and Document Why it Still Fits
Tax rates and business rules have changed under the OBBBA, raising the possibility that the type of business entity you have may no longer be the most advantageous. It’s a good idea to examine how your type of business entity affects your taxes, the risks you’re exposed to, and what it takes to remain in business compliance.
For Business Owners:
If you expanded your business into new states, added partners, changed ownership, hired across state lines, or pursued funding, your entity structure and compliance posture likely need a refresh.
For Advisors and CPAs:
Review entity choice (S Corporation vs. Partnership vs. C Corporation), reasonable compensation, multi‑state apportionment, and whether structure supports PTET optimization.
10. Revisit QSBS Under the OBBBA if a C-Corporation is on the Table
The OBBBA expanded Qualified Small Business Stock (QSBS), also known as Section 1202, planning for qualifying stock issued after July 4, 2025. This includes tiered gain exclusions (50% after 3 years, 75% after 4 years, 100% after 5 years) and increased thresholds and caps for post-enactment shares.
For Business Owners:
If you’re building toward an equity exit, your entity choice and documentation from day one can determine whether QSBS is even possible.
For Advisors and CPAs:
Evaluate eligibility early, considering asset thresholds, qualified trade/business, and stock issuance requirements, and coordinate with legal counsel on structure and capitalization.
11. Take Advantage of Temporary Above-the-Line Deductions
People earning below certain income levels between 2025 and 2028 may be able to take advantage of some new tax breaks, regardless of whether they itemize. Additional deductions include:
- Qualified tips deduction
- Qualified overtime deduction
- Vehicle loan interest deduction
- An additional deduction for seniors
These deductions are based on income and will be phased out for those who earn over certain amounts.
For Business Owners:
Don’t assume you qualify. These deductions are subject to rules and regulations and require thorough documentation.
For Advisors and CPAs:
Pay close attention to reporting implementation. IRS guidance notes that reporting requirements evolve, and taxpayers/employers must track qualifying amounts carefully.
12. Beware of Phaseouts and Cliffs
Phaseouts and benefit cliffs can be costly, often totaling more than rates. The 2026 tax year could include some unpleasant surprises, including:
- SALT phase‑downs for higher incomes
- Income‑based phase-outs for new, temporary deductions for tips, overtime, car interest, and seniors
- Charitable deduction limitations beginning in 2026
For Business Owners:
Conduct a Q3 forecast so you can adjust before year end.
For Advisors and CPAs:
Build a simple dashboard, including K‑1 income, wages, distributions, withholding or estimates, and charitable or retirement moves, and then stress test.
CorpNet Can Help
If multi‑state activity is growing, make sure the entity is properly registered and maintained in every required state (foreign qualification, registered agent coverage, annual reports). Compliance gaps often become tax and penalty issues later.
This article is educational and not tax or legal advice. Rules are fact‑specific and state‑specific. Consult a qualified tax professional for your situation.
