Many small business owners and entrepreneurs are still operating under tax rules shaped by the Tax Cuts and Jobs Act (TCJA) enacted during the Trump administration. Understanding these provisions can help entrepreneurs reduce taxes, improve cash flow, and plan more strategically through 2026 and beyond.
One of the most valuable benefits is the Qualified Business Income (QBI) deduction, which allows eligible pass-through businesses—such as sole proprietors, partnerships, and S corporations—to deduct up to 20% of qualified business income. Proper income planning, expense tracking, and reasonable compensation strategies are essential to maximizing this deduction, particularly for higher-income earners.
Another important tax planning opportunity involves bonus depreciation and Section 179 expensing. Although bonus depreciation is phasing down, entrepreneurs can still deduct a significant portion of qualifying equipment, vehicles, and technology purchases in the year they are placed in service. Timing capital investments strategically can create meaningful tax savings.
The TCJA also lowered the corporate tax rate to a flat 21%, making C corporations more attractive for certain growing businesses that plan to reinvest profits rather than distribute income. Business owners should periodically review whether their entity structure still aligns with their tax goals.
Real estate investors and business owners may benefit from expanded Section 179 deductions, which allow immediate write-offs for certain improvements to commercial property. However, entrepreneurs should also plan around limitations such as the SALT deduction cap and business interest expense restrictions.
Consulting with a qualified tax professional can help entrepreneurs remain compliant while maximizing available deductions under current tax law. Please feel free to reach out!
