2026 Compliance and Opportunity Update, What Small Businesses Need to Know

As 2026 approaches, many business owners are trying to sort through what’s changed—and what actually requires action. New tax laws, revised reporting thresholds, and compliance updates are creating real implications, not just noise.

This guide highlights the key changes that matter most and outlines clear, practical steps you can take to stay compliant, manage risk, and avoid unnecessary tax exposure. Let’s get into it.

Major Tax Law Changes Under the OBBBA

The One Big Beautiful Bill Act (OBBBA) made waves by turning several temporary tax provisions into permanent fixtures. For small business owners, this means more certainty and some real opportunities for tax savings.

Here's what's now permanent:

• Qualified Business Income (QBI) Deduction: The 20% deduction for pass-through entities (think sole proprietorships, partnerships, and S-corps) is here to stay. There's even a new minimum $400 deduction if you have at least $1,000 in QBI.

  • Note: For 2026, the 20% Qualified Business Income (QBI) deduction under the OBBBA is subject to phase-out limits. For single filers, the phase-out starts at $200,000 of taxable income and phases out completely by $250,000. For joint filers, the phase-out begins at $400,000 and is fully phased out by $500,000. Business owners above these thresholds will see their QBI deduction reduced accordingly.

• 100% Bonus Depreciation: You can still immediately expense the full cost of qualified equipment and property, new or used.

• Section 179 Expensing: The 2026 limit is $2.56 million, with the phase-out starting at $4.09 million. Both are indexed for inflation.

• R&D Expensing: Domestic research and development costs can be fully deducted in the year incurred, no more multi-year amortization headaches.

• Business Interest Deduction: The calculation now uses EBITDA again, which is more favorable for most businesses.

  
  

New credits and provisions to watch:

• Tax-Free Tips and Overtime: Qualifying tips (up to $25,000/year) and overtime wages (up to $12,500 single/$25,000 joint) are no longer subject to federal income tax for eligible employees. Update your payroll systems!

• Employer-Provided Childcare Credit: The max credit jumped to $500,000 (up to $600,000 for eligible small businesses).

• Social Security Wage Base: Increased to $184,500 for 2026.

*** Additional detail in our How the One Big Beautiful Bill Act Impacts Tax Planning for Individuals and Businesses blog post.

Action step: Review your payroll setup, update your depreciation schedules, and make sure you're capturing every deduction you're entitled to.

1099 and Form 8300 Reporting Triggers

New thresholds are in effect for 2026, and the IRS is watching more closely than ever.

1099 Changes:

• The reporting threshold for Form 1099-NEC (nonemployee compensation) is now $2,000 (up from $600).

• 1099-K threshold for third-party networks returns to $20,000 and 200 transactions.

  
  

Form 8300 (Cash Payments Over $10,000):

• If you receive more than $10,000 in cash (or equivalents) in a single or related series of transactions, you must file Form 8300.

• E-filing is required if your business files 10 or more total information returns per year.

• File within 15 days of receiving the cash payment.

• Register with the BSA E-Filing System in advance.

  
  

What constitutes an 'information return'? These are IRS-required forms used to report certain types of payments made during your business year—if your total across all types hits 10 or more, you must e-file Form 8300.

Common information returns include:

• Form 1099

• Form 1098

• Form W-2

• Form 5498 (IRA contributions)

  
  

Each type counts toward the 10-form total. For example, if you file 3 W-2s, 4 1099-NECs, and 3 Form 1099-Ks, you must e-file Form 8300 and all other information returns. Remember: this total is per business, per year.

Best Practices:

• Track all cash receipts and aggregate related transactions within a 12-month period.

• Train staff to recognize reportable transactions.

• Retain records for at least 5 years.

Retirement Plan Contribution Limits & SECURE ACT 2.0

Saving for retirement just got a little sweeter. Here are the 2026 limits:

• 401(k)/403(b)/457: $24,500 (up $1,000 from last year)

• Catch-up (age 50+): $8,000 (total: $32,500)

• Catch-up (ages 60–63, SECURE 2.0): $11,250 (total: $35,750)

• Traditional/Roth IRA: $7,500 ($8,600 if 50+)

• SEP IRA/Solo 401(k): Up to 25% of compensation, max $72,000

• SIMPLE IRA: $17,000 ($18,100 for applicable plans); catch-up $4,000 (age 50+)

  
  

Heads up: If you made over $150K and are using catch-up contributions, those must go into a Roth account.

Action step: Max out your contributions where possible, and review your plan options for the best fit.

2026 Accountable Reimbursement Plan Highlights

If your business reimburses employees for expenses, having a compliant accountable plan is essential. Here's what you need to know for 2026:

What's Reimbursable:

• Travel expenses (airfare, lodging, mileage at IRS rates)

• Business meals (50% of allowable cost, per IRC §274)

• Per diem allowances for overnight travel (no meal receipts required, but travel dates/location/purpose must be documented)

• Other ordinary business expenses (supplies, professional dues, training, etc.)

  
  

What's NOT Reimbursable:

• Personal or family expenses

• Commuting to a regular work location

• Lavish or extravagant expenses

• Fines, penalties, traffic violations

• Expenses without adequate substantiation

  
  

Key Deadlines:

• Submit expense reports within 60 days of the expense.

• Return excess advances within 120 days.

  
  

Action step: Review your reimbursement policy, ensure your team knows the rules, and keep documentation tight.

Meals Deductibility Cheat Sheet

Let's clear up a common source of confusion: what's deductible, what's not, and what you need to document.

50% Deductible Meals (if properly substantiated):

• Travel meals while away from home overnight for business

• Client/customer/prospect meals with a business discussion and employee present

• Working business meals (training, planning, strategy meetings)

• Conference meals purchased separately from entertainment

  
  

NOT Deductible (0%):

• Office snacks, coffee, bottled water

• Breakroom or pantry food

• "Convenience" meals for employees

• Team lunches without a documented business agenda

• Social or morale meals, holiday parties

• Any meal without substantiated business purpose

  
  

Required Documentation:

• Date, amount, vendor/location

• Business purpose

• Business relationship (if applicable)

  
  

Common Misconceptions:

• "It was a working lunch" doesn't count without a real business agenda.

• Reimbursing a meal doesn't make it deductible.

• 100% meal deductions ended after 2022, don't get caught off guard.

  
  

Action step: Update your accountable plan, train your team, and keep detailed records for every business meal.

Short-Term Rentals: Business Activity or Passive Income?

Your Airbnb may qualify as an active business if:

• The average guest stay is 7 days or less (or 30 days with substantial services).

• You provide hotel-like services: daily cleaning, concierge, meals, transportation, activities.

• You materially participate (500+ hours, or 100+ hours and more than anyone else).

  
  

Business (Schedule C) vs. Rental Property (Schedule E):

What if you use a property manager?

You can still qualify as a business if you meet the material participation tests and/or provide substantial services: even with a manager handling day-to-day operations.

Action step: Review your rental's structure and services. If you want to maximize deductions, document your involvement and the services you provide.

ADA Website Compliance: What You Need to Know

Here's a myth that trips up a lot of business owners: "I have fewer than 15 employees, so I don't have to worry about ADA compliance." That's only true for employment (Title I). For customer access: including your website: Title III applies to businesses of all sizes.

Over the past few years, website ADA compliance has become a hot topic for small business owners due to a sharp rise in lawsuits alleging inaccessible websites. Plaintiffs’ attorneys are filing ADA lawsuits against businesses of all sizes—even those with just a handful of employees—claiming websites are ‘public accommodations’ under the Americans with Disabilities Act (ADA). Courts and the Department of Justice have increasingly sided with plaintiffs, setting a precedent that most business websites must be accessible to individuals with disabilities. Noncompliance risks demand letters, costly settlements, and legal fees, making proactive website compliance a smart move for any business serving the public online.

What you need to do:

• Alt Text: Every image needs a description for screen readers.

• Color Contrast: Text must stand out against backgrounds.

• Keyboard Navigation: Users should be able to navigate your site using only the Tab key.

• Video Captions: All videos need closed captions.

• Form Labels: Every form field needs a coded label.

• No Flashing: Avoid anything that flashes more than 3 times per second.

  
  

Immediate Protection Step:

Publish an Accessibility Statement on your website. Include:

1. Your commitment to accessibility.

2. That you're working toward WCAG 2.1 AA standards.

3. A phone number or email for visitors who need assistance.

   
   

The "Tab Test":

Go to your website, don't use your mouse, and press Tab repeatedly. Can you navigate the whole site? If not, you've got work to do.

Action step: Add an Accessibility Statement to your footer, review your site for quick fixes, and prioritize progress.

Ready to Take Action?

You don't have to navigate all of this alone. Whether you're updating your payroll, reviewing your expense policy, or wondering if your Airbnb qualifies as a business, we're here to help you make sense of it all.

Book a meeting with us for additional information or to discuss your personalized strategy. Let's make 2026 your most compliant and most profitable year yet.