The 2026 tax season will feel very different if you earn big money or run a business. With the One Big Beautiful Bill Act signed in July 2025, many temporary tax breaks became permanent, while several individual rules turned sharper and less forgiving.
This law rewards planning and punishes autopilot. If you assume your old tax playbook still works, you may pay more than expected. The good news is that smart moves still exist, but timing matters more than ever.
Business Tax Wins That are Finally Locked in
The biggest win for business owners is certainty. Full bonus depreciation is now permanent. That means you can deduct 100% of the cost of a qualifying property in the year you place it in service. Equipment, machinery, computers, and even used assets all count. Cash flow improves fast, and long depreciation schedules are no longer required.
This change makes expansion cheaper and easier to plan. Instead of spreading deductions over five or seven years, businesses can offset income right away. That matters if you are scaling, upgrading, or simply trying to smooth income during strong years.
Research and development expensing also gets a permanent fix. Domestic R&D costs can now be deducted immediately instead of being amortized over five years. Even better, businesses that paid for R&D between 2022 and 2024 can amend prior returns and claim deductions that were previously locked up. That can mean real refund checks, not just future tax savings.
This favors companies that build, test, or improve products and systems. Software firms, manufacturers, and engineering-heavy businesses stand out here. The paperwork is worth it if your past R&D spend was significant.
Voit / Pexels / The 20% Qualified Business Income deduction also stays alive. Owners of S corporations, partnerships, and sole proprietorships can still deduct up to 20% of business income.
Starting in 2026, the phaseout begins around $278,000 for single filers and $556,000 for joint filers.
High Earners Face a Sharper AMT Reality
The Alternative Minimum Tax is the quiet shock of 2026. Yes, the higher exemption amounts are permanent. That sounds helpful, but the phaseout now hits faster as income rises. Many households that never worried about AMT before will now land right in it.
Married couples earning between $750,000 and $1.5 million are the most exposed. Common triggers include large SALT deductions, exercising incentive stock options, and holding private activity bonds. During the phaseout window, marginal tax rates can jump into the low to mid 30% range without warning.
ISO exercises are especially risky. In some cases, the effective tax rate on the AMT adjustment can approach 42%. That can wipe out the expected upside of equity compensation if you exercise too much in a single year.
The standard deduction does rise to $16,100 for singles and $32,200 for joint filers in 2026. Tax brackets also shift upward slightly. These changes help at the margin, but they do not offset AMT exposure for high earners.
The SALT deduction cap increases to $40,000, but there is a catch. Once modified AGI passes $500,000, that cap phases down. Many high earners will not get the full benefit. This makes state tax planning far less forgiving than it looks on paper.
New Deductions That Help, But Come With Strings
Karola / Pexels / Taxpayers age 65 and older can claim an extra deduction of up to $6,000, or $12,000 for a qualifying married couple.
The benefit fades out once income passes $75,000 for singles and $150,000 for joint filers. It helps middle-income retirees more than wealthy ones, but it still matters in tight planning years.
Workers who earn tips get a new deduction of up to $25,000 for qualified cash tips. There is also a deduction of up to $12,500 for qualified overtime pay, or $25,000 for joint filers. These deductions phase out at higher income levels and are aimed at wage earners, not executives.
