July 2026 · Taxes, Small Business

What OBBBA Changed for Small Businesses

The permanent write-offs, the refund window that closes July 6, and the deduction that ended June 30

The One Big Beautiful Bill Act (OBBBA) sets the rules your business runs under right now: some pieces are permanent, some newly in force, and one refund window is closing within days.[1] Here is where each one stands for a small business:

Change	Where it stands
Equipment write-offs	Permanent, at 100 percent[1]
The 20 percent qualified business income (QBI) deduction	Permanent, with a new floor[1]
Domestic R&D costs	Deductible in full; refunds close July 6[2]
1099 thresholds	Raised to $2,000 and $20,000[1][3]
Tips and overtime reporting	New W-2 rules for 2026[4]
Clean energy credits	Ended, or ending[5]

The equipment write-offs are permanent

100 percent bonus depreciation is permanent for equipment acquired and placed in service after January 19, 2025, and the Section 179 limit rose to $2.5 million, phasing out above $4 million in purchases.[1][6] In practice, new and used equipment can be written off in full the year it starts working.

The date rules still decide which year, so the delivery-date timing from the year-end checklist still applies, and equipment acquired before January 20, 2025 falls under the old phase-down at 40 percent.[6]

The 20 percent QBI deduction is permanent too

QBI lets most sole proprietors, partners, and S-corp owners deduct up to 20 percent of business profit, and it was set to expire after 2025. It is now permanent.[1][7]

Two improvements arrive for 2026: the income ranges where the deduction phases down widen to $75,000 for single filers and $150,000 for joint, and anyone with at least $1,000 of QBI from a business they actively work in is guaranteed a deduction of at least $400.[1]

A refund window closes July 6

From 2025 on, domestic research and development costs are deducted in the year they are spent, undoing the 2022 rule that forced them to be spread over five years.[1][2]

Smaller businesses can also reach backward: those averaging $31 million or less in gross receipts may amend their 2022 through 2024 returns to take the deduction in those years, and the amended returns are due by July 6, 2026.[2] Research is broader than laboratory work, and custom software development counts.

If your business built software or developed products in those years, a free consultation before the window closes is worth the half hour.

Less paperwork on 1099s

Two reporting thresholds loosened. Payments to contractors made in 2026 trigger a 1099-NEC at $2,000 rather than $600, a change January's checklist flagged. The 1099-K for card and app payments is back to $20,000 and 200 transactions, undoing the scheduled drop to $600.[1][3]

Tips and overtime: the employer side

The tips and overtime deductions belong to your employees, but the reporting belongs to you: starting with tax year 2026, W-2s must show qualified tips and qualified overtime as their own separate amounts.[4]

For 2025 filings the IRS waived penalties for employers who reported totals correctly without the new breakouts, and that relief ends with the 2026 forms, so payroll systems need the new fields this year.[4]

What is gone

The law ended the clean energy credits on a staggered schedule:[5]

Clean vehicle credits: ended for vehicles acquired after September 30, 2025.[5]
Home energy credits: solar and efficiency credits ended for installations completed after December 31, 2025.[5]
The 179D deduction: the commercial building efficiency deduction is closed to projects whose construction begins after June 30, 2026, while projects that broke ground by that date can still claim it.[5]

The bottom line

Permanent bonus depreciation and QBI reward the same planning as before, the 1099 changes apply to 2026 payments, the W-2 breakouts start with 2026 payroll, and the R&D refund window shuts July 6. The amounts above are the law's starting figures, and most of them index for inflation in later years.[1]