Federal Tax Update 2026: One Big Beautiful Bill Act Key Takeaways for Individuals, Businesses, and S Corporations

Veltriqa LLC · Tax newsletter / practitioner brief

Audience: Business owners, S corporation shareholders, individuals, and tax & compliance professionals · veltriqa.com

Draft date: September 29, 2026 · For review — not tax advice

Why this matters now

The 2026 federal tax update — the profession’s annual deep dive into what is new in tax law — was dominated by one statute: the One Big Beautiful Bill Act (OBBBA). Lower Tax Cuts and Jobs Act (TCJA) rates are now permanent, first-year expensing is back, and several brand-new deductions require first-year decisions. Fourth quarter is when those calls get made: entity structure, capital expenditure timing, compensation design, and retirement contributions.

This Veltriqa newsletter merges our Federal Tax Update — Key Takeaways into one client-ready brief in plain English, with an S corporation spotlight and year-end planning cues.

Key takeaways (pin this)

• TCJA permanence ends sunset planning for rates, the expanded standard deduction, and the increased child tax credit.

• New individual deductions cover qualifying tip income (up to $25,000), overtime pay (up to $12,500; $25,000 joint), car loan interest (up to $10,000), and a temporary senior deduction ($6,000 for age 65+).

• State and local tax (SALT) cap expands to as much as $40,000 through 2029 — revisit itemize-vs-standard and passthrough entity tax (PTET) math.

• 100% bonus depreciation is permanent, with new Qualified Production Property (QPP); Section 179 limits rise; Section 174 research and experimental (R&E) costs can be expensed immediately again.

• Section 163(j) interest limitation rules changed; Revenue Procedure (Rev. Proc.) 2026-17 offers election-withdrawal opportunities.

• Reporting and workforce risk moved: Form 1099 / 1099-K thresholds, Form 1099-DA digital-asset broker reporting, and Department of Labor (DOL) contractor classification proposals.

• S corporation owners should re-run S vs. C analysis, PTET vs. SALT, basis and reasonable compensation, and exit / Net Investment Income Tax (NIIT) planning before year-end.

For individuals

TCJA provisions made permanent. The lower marginal tax rates, expanded standard deduction, and increased child tax credit from the 2017 Tax Cuts and Jobs Act are now permanent law — no more sunset planning.

New tip income deduction — up to $25,000. Workers in customarily tipped occupations can deduct qualifying tip income. Final regulations (Treasury Decision (TD) 10044) are already issued. If you earn tips, this belongs in your planning toolkit.

New overtime pay deduction — up to $12,500 ($25,000 for joint filers). Fair Labor Standards Act (FLSA)–eligible employees can deduct qualifying overtime pay. Employers should review how overtime is tracked and reported.

New car loan interest deduction — up to $10,000 per year. Interest on loans for qualifying new U.S.-assembled vehicles is deductible. Keep purchase documentation.

New temporary senior deduction — $6,000. Taxpayers age 65 and older get an additional deduction. Worth modeling for retirees deciding on Roth conversions and Social Security timing.

SALT cap expanded — up to $40,000 through 2029. The higher state and local tax deduction cap reopens bunching strategies and changes the itemized-versus-standard math for many households.

Trump Accounts — a new savings vehicle for minors. New rules cover contributions, basis tracking, and a pilot program. Families should understand the mechanics before funding.

For businesses

100% bonus depreciation is permanent — plus new Qualified Production Property (QPP). Full expensing is back for good, with a new QPP category for production property. Timing of capital expenditures matters enormously.

Increased Section 179 deduction. Higher expensing limits give small and mid-size businesses more first-year write-off room.

Section 174 R&E: immediate expensing restored. The five-year amortization of research and experimental expenditures is reversed — research and development (R&D) costs can be expensed immediately again. A major cash-flow win for innovative companies.

Section 163(j) changes — and a second chance. Business interest limitation rules changed, and Rev. Proc. 2026-17 offers new election-withdrawal opportunities. If you made elections under the old rules, revisit them.

Qualified small business stock (QSBS) exclusion changes. Founders and early investors should review holding-period and eligibility planning.

Form 1099 / 1099-K: new thresholds. Businesses using third-party payment platforms need to know where the reporting lines are now.

Also covered in the update

Digital assets. Updated guidance on basis tracking and cost identification methods, plus the phased rollout of Form 1099-DA broker reporting. Crypto recordkeeping is getting formal — fast. For financial reporting, note that book treatment (for example, Financial Accounting Standards Board (FASB) stablecoin discussions) and Internal Revenue Service (IRS) property treatment are not the same game: every sale, swap, or payment can still be a taxable event.

Gig economy. Independent contractor versus employee classification remains hot, with the DOL’s 2026 proposed rule in play and IRS frameworks to navigate.

Tariff policy. Analyzed as both fiscal and trade policy, with real effects on business planning and supply-chain cost.

Artificial intelligence (AI) in tax practice. The IRS is using AI to enhance audit selection — another reason clean, well-documented returns matter.

For S corporation owners — what matters most

1. Permanent TCJA rates change the S versus C math. Revisit entity analysis and distribution strategy — the trade-offs shifted.

2. 100% bonus depreciation is back for good. Time equipment and vehicle purchases for cash flow, not a phase-down calendar.

3. Bigger Section 179 limits. More first-year expensing room for qualifying property placed in service by your S corporation.

4. R&D expensing restored. If your S corporation develops software or performs R&E work, immediate expensing of Section 174 costs is a direct cash-flow win.

5. Revisit Section 163(j) elections. Leveraged S corporations should re-run the numbers under Rev. Proc. 2026-17.

6. Re-run the SALT cap versus PTET math. With the SALT cap up to $40,000 through 2029, the passthrough entity tax election calculus changed for owners in high-tax states.

7. New tip and overtime deductions affect your workforce. Accurate overtime tracking and tip reporting are more valuable than ever.

8. Planning an exit? Complete a passthrough-interest-sale analysis plus NIIT treatment before selling S corporation stock or assets.

9. Contractor classification risk. Misclassification exposure is growing under the DOL’s 2026 proposed rule.

1. Crypto in the business. Basis tracking and cost identification must survive the Form 1099-DA era.

2. Year-end hygiene that still makes or breaks the return. Confirm reasonable compensation before bonuses and distributions; track stock and debt basis; prepare for Schedule K-1 issuance; and confirm qualified business income (QBI) deduction eligibility while there is still time to act.

What this means for year-end planning

The One Big Beautiful Bill Act rewrote large parts of the playbook — deductions are bigger, expensing is back, and several brand-new provisions need first-year decisions. The fourth quarter is when these calls get made.

If you missed or underpaid the September 15 estimated tax installment, catch up as soon as possible — underpayment penalties are computed by payment period. Review year-to-date income now and mark January 15, 2027 as the final estimated tax payment date for the 2026 tax year. Anyone expecting to owe $1,000 or more at filing — including S corporation shareholders, partners, and sole proprietors — generally must pay tax as income is earned.

Interim tax accounting under Accounting Standards Codification (ASC) 740 still matters for entities that report a provision: one-off items (a law change, a major asset sale, a valuation allowance shift) are recorded in the quarter they occur. Discrete tax events deserve discrete planning before year-end.

That is what Veltriqa’s tax planning service is for. And if you are an S corporation owner, our end-to-end S corporation return preparation — Form 1120-S, Schedules K-1, and state filings — keeps you compliant while we optimize.

Practitioner glossary

ASC 740 — Accounting Standards Codification Topic 740 (Income Taxes).

DOL — Department of Labor.

FLSA — Fair Labor Standards Act.

IRS — Internal Revenue Service.

NIIT — Net Investment Income Tax.

OBBBA — One Big Beautiful Bill Act.

PTET — Passthrough entity tax.

QBI — Qualified business income.

QPP — Qualified Production Property.

QSBS — Qualified small business stock.

R&D / R&E — Research and development / research and experimental.

SALT — State and local tax.

Section 163(j) — Business interest expense limitation.

Section 174 — Research and experimental expenditures.

Section 179 — Election to expense certain depreciable business assets.

TCJA — Tax Cuts and Jobs Act of 2017.

TD — Treasury Decision.

Disclaimer

This newsletter is for general information only and is not tax advice. Tax law is complex and fact-specific — consult your CPA before acting.