Key Takeaways
- The 2026 SALT cap rises to as much as $40,400 for joint filers but phases down to $10,000 at higher incomes, which can make a passthrough entity tax (PTET) election more valuable.
- With bonus depreciation restored to 100%, cost segregation studies can deliver an even larger first-year tax benefit.
- Businesses may now be able to immediately deduct U.S.-based R&D costs, including certain software development expenses, rather than spreading them over several years.
- The employer childcare credit increases to 40% of qualifying costs (50% for eligible small businesses), and a new 1% floor applies to C corporation charitable deductions.
- Tariff refunds are generally taxable to the extent the original payments produced a tax benefit, and remote employees or out-of-state sales can create state tax exposure even without a physical presence.
The 2026 Tax Changes Business Owners Shouldn’t Overlook
Now is an ideal time for business owners to evaluate the latest tax law changes and identify planning opportunities, including:
Passthrough Entity Tax
The SALT deduction cap increases to as much as $40,400 for married taxpayers filing jointly in 2026, but the benefit phases down to $10,000 at higher income levels. Coupled with the reduced value of Schedule A deductions for taxpayers in the 37% bracket, a passthrough entity tax (PTET) election may offer greater tax savings. S corporations should carefully evaluate the impact on all shareholders, as inconsistent treatment could create concerns regarding the one-class-of-stock requirement.
Bonus Depreciation & Cost Segregation
With bonus depreciation restored to 100%, cost segregation studies can provide an even greater first-year tax benefit.
R&D Expenses
Recent tax law changes may allow businesses to immediately deduct U.S.-based research and development costs, including certain software development expenses, instead of spreading those deductions over several years. Before year-end, business owners should review R&D projects and related costs to make sure they capture available deductions and credits.
Employer Child Care Credit
Beginning after 2025, the employer childcare credit increases to 40% of qualifying costs, or 50% for eligible small businesses. The annual credit limit also increases, creating potential tax and employee-retention opportunity.
Charitable Contributions
Beginning after 2025, a new 1% floor applies to C corporation charitable deductions. Businesses should consider the timing and deductibility of planned contributions to maximize tax benefits.
Tariff Refunds
Following the court decisions invalidating certain tariffs, affected businesses may be entitled to refunds of previously paid duties. These refunds are generally taxable to the extent the original tariff payments produced a tax benefit through deductions or inventory costs. Any interest received on the refund is also taxable.
State Tax Exposure
Businesses can be subject to state taxes, even various without a physical presence in the state. Economic nexus, remote employees, contractors, inventory and sales into other states can create additional state tax, payroll and registration obligations. Businesses should regularly review their multistate exposure.
North Carolina Conformity
North Carolina generally conforms to the federal tax code as of July 5, 2025, but differences remain for provisions including bonus depreciation, Section 179 and R&D expensing.
What Businesses Should Review
Businesses should work with their tax advisors to evaluate:
- Passthrough entity tax elections
- Depreciation and cost segregation opportunities
- R&D activities
- Employer childcare benefits
- Charitable contribution timing
- Tariff refund treatment
- Multistate tax exposure
- Federal and North Carolina tax differences
Because tax treatment varies based on individual circumstances, businesses should consult their tax advisors when evaluating these provisions.