Trump's 2026 Small Business Tax Changes: OBBBA Permanent QBI, Bonus Depreciation, and Tariff Impact

If you own a small business in 2026, the tax landscape under the second Trump administration looks dramatically different from what you may have planned for back in 2024. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made several Tax Cuts and Jobs Act provisions permanent and added new ones — but the same administration's sweeping tariffs are quietly draining roughly $85 billion per year out of small business cash flow. The net effect for any given business depends heavily on what you sell, what you import, and how you're structured.

This guide walks through what changed, what's permanent, what's still in flux, and what small business owners should be doing right now to protect margins and reduce their 2026 tax bill.

The Headline: QBI Is Now Permanent

The 20% Qualified Business Income (QBI) deduction under Section 199A was the biggest small business win from the original 2017 tax law — and it was set to expire at the end of 2025. The OBBBA made it permanent and, starting in 2026, made it more generous in a few specific ways.

What Stayed the Same

The basic mechanic is unchanged: owners of pass-through entities (sole proprietorships, partnerships, S corporations, and most LLCs) can deduct up to 20% of their qualified business income on their personal returns. If you net $100,000 from your business, the QBI deduction can knock $20,000 off your taxable income before federal income tax is calculated. For a taxpayer in the 24% bracket, that's roughly $4,800 in real savings.

What Changed in 2026

Three meaningful improvements kicked in this year:

1. Wider phase-in ranges. The income range over which limits begin to apply grew from $100,000 to $150,000 for joint filers, and from $50,000 to $75,000 for single filers. More owners get the full deduction without complicated wage-and-property calculations.
2. Inflation-adjusted thresholds. For 2026, the upper income thresholds sit around $203,000 (single) and $406,000 (married filing jointly).
3. A new minimum deduction. If you have at least $1,000 of QBI from an active business in which you materially participate, you get at least a $400 deduction — even if you'd otherwise be fully phased out as a specified service business.

Some sources reference a 23% rate; this is currently a proposal under discussion rather than law, so plan around 20% unless and until it passes.

100% Bonus Depreciation Is Back — Permanently

For property acquired and placed in service after January 19, 2025, businesses can immediately deduct the full cost of qualifying capital purchases instead of depreciating them over years. This includes machinery, equipment, computers, furniture, fixtures, and vehicles weighing under 6,000 pounds.

The big difference from the original TCJA version: this is now permanent, not on a phase-down schedule. You no longer have to time large equipment purchases around an expiring deduction.

How This Pairs with Section 179

Section 179 expensing limits also jumped meaningfully:

• Maximum expensing: $2.56 million in 2026 (up from $1.16 million pre-OBBBA)
• Phase-out starts: $4.09 million of qualifying property placed in service
• Full phase-out: $6.65 million

For most small businesses, Section 179 and bonus depreciation produce similar results. The practical difference: Section 179 can be applied selectively to specific assets, while bonus depreciation applies to all qualifying property in a class. Most accountants recommend running Section 179 first up to its limit, then letting bonus depreciation handle anything above.

The Employer-Provided Childcare Credit Got Much Bigger

If you've ever considered offering childcare benefits to employees, 2026 is the year to look closely. Beginning this year, the credit jumps from 25% to 40% of eligible costs for most employers, with the maximum credit climbing to $500,000.

For eligible small businesses (broadly, those meeting certain gross receipts tests), the credit is even more generous: 50% of eligible costs, capped at $600,000 annually.

This includes building or maintaining a childcare facility, contracting with a third-party provider, or paying for employee childcare resource and referral services. For service businesses competing for talent, this is a substantially better return than salary increases of equivalent cost.

Interest Deductions Got Easier

The OBBBA reverted business interest expense limits to a pre-2022 calculation: 30% of EBITDA, not EBIT. The difference matters most for capital-intensive businesses with significant depreciation expense. By including depreciation and amortization in the calculation base, more interest expense becomes deductible.

If you've been bumping against the Section 163(j) limit on interest deductions, redo the math under the new rules — you may have meaningful additional deductions available.

Tariffs: The Other Side of the Ledger

Here's where the picture gets complicated. While the OBBBA delivers tax savings, tariff policy is moving in the opposite direction for any business that touches imported goods.

The Numbers

• The effective U.S. tariff rate sits near 19% — the highest in over 90 years.
• Small business importers paid roughly $25,000 more per month in tariff costs from April through September 2025 versus the same period the prior year.
• Direct tariff costs to U.S. small businesses run approximately $85 billion per year.
• Average tax increase per U.S. household from tariffs alone: about $1,500 in 2026.

Who Gets Hit Hardest

Three categories of small businesses face the most pressure:

1. Importers and wholesalers of finished goods, particularly anything from China, Mexico, or the EU.
2. Manufacturers that rely on imported components or raw materials (steel, aluminum, electronics, textiles).
3. Retailers with thin margins on imported inventory who can't fully pass costs to consumers.

More than 70% of small businesses surveyed have raised prices to offset tariff costs, but consumer confidence has softened in parallel — meaning price increases don't always stick.

Practical Tariff Responses

If imports are central to your business, the playbook is no longer "wait and see":

• Map your supply chain by HTS code. You can't manage what you can't measure. Identify which SKUs carry which tariff exposure.
• Diversify sourcing. Vietnam, India, Mexico (despite recent friction), and domestic suppliers may now pencil out at prices that wouldn't have made sense in 2023.
• Look at duty drawback and Foreign Trade Zones. If you re-export any portion of imported inventory, you may be able to recover up to 99% of duties paid.
• Track tariff costs separately in your books. This is critical both for pricing decisions and for any future refund opportunities if tariffs are rolled back or successfully challenged in court.

That last point matters more than it sounds. Several IEEPA-based tariff actions are being challenged in court, and businesses with clean documentation of what they paid will be best positioned if refunds become available. Sloppy bookkeeping has already caused some importers to miss reclamation windows.

Estimated Taxes and Cash Flow Planning

The combination of permanent QBI, permanent bonus depreciation, and ongoing tariff cost pressures means quarterly estimated tax planning is genuinely different in 2026 than it was even two years ago.

Key dates for 2026 calendar-year filers:

• April 15, 2026 — Q1 estimated payment
• June 15, 2026 — Q2 estimated payment
• September 15, 2026 — Q3 estimated payment
• January 15, 2027 — Q4 estimated payment

The safe harbor is unchanged: pay either 90% of your current year liability or 100% of last year's (110% if your prior-year AGI exceeded $150,000) to avoid underpayment penalties. But because deductions changed materially, basing 2026 estimates purely on 2025's tax liability could leave you over- or under-paid in either direction.

A practical approach: do a mid-year true-up in late June or early July with year-to-date numbers, adjust your remaining quarterly payments accordingly, and accelerate or defer year-end equipment purchases based on where you land.

What About Worker Classification and Hiring?

Two indirect 2026 changes are worth flagging.

Stricter immigration enforcement is tightening labor supply in agriculture, construction, hospitality, and parts of tech that historically relied on H-1B and seasonal worker visas. Small businesses in these sectors should expect higher labor costs and longer hiring timelines, both of which push toward more automation investment — which is exactly what permanent 100% bonus depreciation makes more attractive.

Worker classification scrutiny continues. The IRS, DOL, and state agencies are not pulling back on enforcement of contractor-vs-employee distinctions. If anything, tighter labor markets create incentives for businesses to misclassify, and enforcement is responding accordingly. Section 530 safe harbor protections remain available but require specific documentation patterns to claim.

A Practical 2026 Action List

If you want a punch list, here's what most small business owners should be doing this year:

1. Confirm your QBI eligibility and calculation. If your income falls in the new wider phase-in range, your situation may have changed materially.
2. Plan major equipment purchases. With permanent 100% bonus depreciation, the urgency is gone — but the deduction is still valuable. Time purchases when you have income to absorb them.
3. Re-evaluate entity structure. Permanent QBI changes the math on S-corp elections versus operating as a sole proprietor or partnership. The breakeven point shifts when a 20% deduction is locked in.
4. Audit your tariff exposure. Even small importers should know exactly what they're paying and to whom.
5. Look hard at the childcare credit. For service businesses with 25–250 employees, this may be the single most overlooked credit available in 2026.
6. Reset your estimated tax assumptions. Don't autopilot 2026 estimates from 2025 numbers.
7. Tighten your books. Tariff documentation, fixed asset registers for bonus depreciation, and clean QBI calculations all start with bookkeeping that's actually correct on the day you record the transaction — not reconstructed in March.

That last point gets glossed over in most tax planning articles, and it's the one that actually determines whether all the other planning works. The OBBBA gives you bigger deductions — but only if your records can support them under audit. Sloppy categorization, missed depreciation entries, or missing documentation for childcare expenses all leak real money.

Keep Your Books Ready for the New Tax Reality

The 2026 tax environment rewards businesses with clean, well-categorized financial records — and punishes those without them. Whether you're calculating QBI, claiming bonus depreciation, or documenting tariff costs for potential refunds, your bookkeeping is the foundation underneath every deduction. Beancount.io provides plain-text accounting that's transparent, version-controlled, and AI-ready, giving you complete visibility into every transaction without vendor lock-in or black-box reports. Get started for free and put your books in shape for the tax decisions ahead.