Here Are the Tax Credits and Tax Deductions That Changed for 2026

The One Big Beautiful Bill Act (OBBBA), passed on July 4, 2025, introduces several financial changes including tax deductions and credits. The OBBBA made many tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) permanent and added new tax breaks. As a business owner, contractor or self-employed professional, it’s worth exploring these changes so you can plan effectively for the upcoming tax season. 

Key Deduction Changes Impacting Businesses for 2026

Here are some shifts in deductions that impact business owners. 

Adjustments to the Qualified Business Income (QBI) Deduction

Section 70105 of the OBBBA extended and enhanced the QBI deduction, initially introduced in Section 199A of the TCJA. It increased the taxable income limitation from $50,000 to $75,000 for individuals to account for inflation. It also increased the joint return limits from $100,000 to $150,000. Finally, it introduced a new feature stating that the deduction must be at least $400 to account for business owners with lower income. These new provisions take effect in 2026.

Bonus Depreciation Updates

The OBBBA expanded the types of property eligible for bonus depreciation effective in 2026. It also added a new category for qualified sound recording production, such as music albums and podcasts. In addition, it clarified when this qualified sound recording production is considered placed into service, which is at the time of initial release or broadcast. 

Changes to State and Local Tax (SALT) Deductions

The TCJA placed a cap on the deduction available for SALT. The maximum amount you could claim for SALT deductions was $10,000. The OBBBA extended SALT deductions and increased the cap to $40,000 for 2025 and $40,400 for 2026. The cap will increase by 1% each year until 2029. In 2030, it will revert to $10,000.

Exploring Modified 2026 Tax Credits

Here are the key credit changes.

Energy-Efficiency Credits for Businesses

The OBBBA terminated Section 179D of the Internal Revenue Service (IRS) tax code, which previously allowed building owners, designers and builders to claim a tax deduction for making their buildings more energy efficient. This law will no longer apply to property with construction beginning after June 30, 2026. 

Research and Development (R&D) Tax Credit

Several sections of the OBBBA changed the research tax credit. Changes include:

• Redefining qualified research to refer to domestic research or experimental expenditures under section 174A.
• Creating a start date of December 31, 2024, for all amendments to the research tax credit.
• Enabling taxpayers to adjust their prior tax filings to account for changes in research tax credits.

Take Control of Your 2026 Tax Strategy

If you want additional guidance on your 2026 tax return or need help navigating all the changes, Polston Tax can help. Our team of experienced tax lawyers and tax accountants has thoroughly reviewed the new tax law changes and can help you determine the best tax plan tailored to your specific needs. Schedule a free consultation.