1. QBI is alive. The complexity is too.

For years, owners of pass-through businesses had uncertainty around the Section 199A qualified business income deduction because it was scheduled to expire. The 2025 legislation made the deduction permanent (although permanent is an oxymoron when it comes to tax planning).

For eligible taxpayers, the deduction can be worth up to 20% of qualified business income, although high-income taxpayers can run into wage, property, and specified-service-business limitations. In 2026, the phase-in thresholds have also been adjusted for inflation and the phase-in range was expanded under the new law.

The planning takeaway is not, “Everybody gets 20%.”

Any tax sentence that starts with “you get 20%” deserves a second sentence.

If your business is a pass-through entity, somebody should be modeling whether your compensation, taxable income, entity structure, retirement contributions, and other deductions are helping or hurting the amount you can actually claim.

This is especially relevant to professionals whose businesses may be treated as specified service trades or businesses, where high income can phase the deduction out.

If your accountant simply tells you the deduction will be calculated when the return is prepared, I would ask a follow-up question: “Is there anything we can still do before December 31 that changes the calculation?”

That is the difference between tax preparation and tax planning.

2. A deduction is not a coupon for equipment you do not need

The current rules restored permanent (with a grain of salt) 100% bonus depreciation for many types of qualifying business property acquired after January 19, 2025.

Separately, the Section 179 limits increased. For tax years beginning in 2026, the maximum Section 179 expense deduction is $2.56 million, with the phase-out beginning once qualifying property placed in service exceeds $4.09 million.

These are significant numbers. But I would not use them as an excuse to buy something you do not need.

Buying a $100,000 piece of equipment you do not need to save $30,000 of tax is still a fairly creative way to lose $70,000.

I have never liked tax strategies that amount to, “Spend a dollar so you can save 30 cents.”

If the business already needs machinery, computers, equipment, certain vehicles, or other qualifying property, the tax rules may affect whether it makes sense to place those assets in service before year-end. If the purchase is unnecessary, the deduction does not magically make it a good investment.

The planning questions are:

• Were we going to make the purchase anyway?
• Does the asset qualify?
• Should we use bonus depreciation, Section 179, regular depreciation, or some combination?
• Does accelerating the deduction help us this year or would we rather preserve deductions for later years?
• How will this interact with state taxes and the owner’s personal return?

The biggest deduction is not always the best long-term tax answer.

3. Research costs changed again – because apparently one rule was too easy

For businesses that spend meaningful dollars on domestic research, product development, or software development, the treatment of research and experimental expenditures changed in a material way.

For tax years beginning after 2024, current law generally allows domestic research and experimental expenditures to be deducted as current business expenses. Businesses can also elect certain capitalization and amortization approaches instead. There are transition rules for previously capitalized domestic research costs from the 2022-2024 period.

This is one of those tax provisions that may be irrelevant to a dentist, restaurant, or real estate company and extremely important to a manufacturer, software company, engineering firm, or innovative small business.

If you have engineers, developers, scientists, product designers, or meaningful internal R&D costs, I would specifically ask your CPA whether the new Section 174A rules change how those costs are treated in 2026 – and whether there are old unamortized costs that still need to be addressed.

4. Your retirement plan may be the best business/personal crossover

The employee 401(k) deferral limit increased to $24,500 for 2026. The overall defined-contribution limit increased to $72,000 before applicable catch-up contributions. Owners who are 50 or older may also have catch-up opportunities, with a higher special catch-up limit applying at ages 60 through 63.

Those are useful limits, but I would not stop the conversation there.

A successful owner who has strong, recurring profitability may also want to analyze profit-sharing design or a defined-benefit/cash-balance plan. A cash balance plan can potentially permit much larger deductible employer contributions than a conventional 401(k), but it also introduces actuarial funding requirements, employee costs, and administrative complexity.

It’s easy to gloss over the phrase “actuarial funding requirements.” But what it means is that you might have to put a big chunk into the plan every year for the next several years. Candidly, I’ve read about many business owners being suckered into a relationship with an “advisor” who hooked them because they told them they cannot believe their current advisor didn’t use a cash balance plan to save them more taxes this year. The problem is they didn’t mention that if their business has a terrible year next year, they have an obligation to put additional money into the plan or it falls apart.

The right plan is not simply the one that lets the owner put away the most money.

It is the one that balances:

• The owner’s tax situation.
• Retirement goals.
• Business cash flow.
• Employee demographics.
• Employee-retention objectives.
• The company’s willingness to make recurring contributions.

Your retirement plan is a business expense, an employee benefit, and part of your personal retirement strategy at the same time. Treating it as only one of those things leaves value on the table.

5. Debt-heavy businesses should revisit 163(j) before 163(j) revisits them

Section 163(j), the business-interest limitation, has also changed. For tax years beginning after 2024, depreciation, amortization, and depletion are once again added back when calculating adjusted taxable income for purposes of the limitation. Additional changes apply beginning after 2025.

That sounds like something only a tax attorney could love, but the practical issue is straightforward: businesses with meaningful debt may have a different amount of deductible business interest than they would have under the prior rules.

If your company has acquisition debt, equipment financing, real estate debt, or other substantial leverage, I would ask your CPA whether the 2026 rules change the amount of interest you expect to deduct.

You may find that a rule that felt irrelevant when rates were low becomes much more important after several years of higher borrowing costs.

April is for reporting. Fall is for planning.

If I were a business owner heading into the last four months of 2026, I would want a planning meeting that answers at least these questions:

1. What does taxable income look like if the year ends today?
2. What large purchases or business investments are already planned?
3. Are there deductions we can accelerate or income we can time appropriately?
4. Are retirement-plan contributions optimized for both the owner and employees?
5. Are there major transactions – real estate, business sale, acquisitions, large bonuses – that change the picture?
6. What are the estimated federal and state tax payments going to look like?

The objective is not to get your tax bill to zero. The objective is to pay the lowest reasonable long-term tax while still making business decisions that make economic sense.

A great CPA can prepare an accurate return in April. A great planning process asks the questions while there is still time to change the answers. The tax return tells you what happened; planning still has a chance to affect what happens.