2026 Tax Changes Every Business Leader Should Be Ready For
2026 brings a notably favorable tax landscape for businesses, especially around depreciation and research incentives. Recent legislation, including the One Big Beautiful Bill Act (OBBBA), reshapes how you plan for capital investments, innovation spending, and year-end tax strategy.
100% Bonus Depreciation
100% bonus depreciation is permanently reinstated, allowing you to immediately expense the full cost of qualifying property placed in service. This generally applies to most new and used tangible property with a recovery period of 20 years or less, which is especially valuable for heavy equipment, technology, and real estate improvements through cost segregation. For 2026 capital projects, this can accelerate deductions, reduce taxable income, and improve cash flow.
Immediate R&D Expensing
The OBBBA restores immediate deduction of domestic research and experimental (R&E) costs for tax years beginning after December 31, 2024. This effectively reverses the prior requirement to amortize these expenses over five years, which had increased tax burdens for many innovative businesses. Small businesses with average annual gross receipts of $31 million or less may be able to apply these rules retroactively, subject to IRS elections and guidance.
R&D Credit Enhancements
In addition to expensing changes, the OBBBA strengthens the R&D credit environment by fully reversing the ยง174 capitalization rules. Many businesses may have opportunities to amend prior returns or claim additional deductions in 2025-2026, depending on size and filing status. Together, immediate expensing and the R&D credit can provide both a deduction and a credit for qualifying activities, creating a powerful incentive to invest in innovation.
Planning Priorities for 2026
- Capital investments: Use 2026 to evaluate major equipment purchases, facility improvements, and technology upgrades to maximize 100% bonus depreciation.
- Real estate and cost segregation: Property owners should review cost segregation and energy-related incentives that may pair well with the new rules.
- R&D support: Maintain solid documentation, including project descriptions, time-tracking or reasonable allocation methods, and evidence of experimentation or technological uncertainty.
- Retroactive opportunities: Eligible small businesses should explore retroactive R&D expensing elections that could generate refunds.
DBMCPA can help you analyze these provisions in the context of your specific industry, facts, and long-term goals to build a tax strategy that supports your business growth.
