Other Items Affecting 2025, 2026 or Future Years’ Business Tax Returns (including 1040s with Schedules C or E)
- Bonus depreciation: The Act makes additional first-year (bonus) deprecation for certain qualified property acquired after January 19, 2025, permanent at 100%. There is also a new 100% bonus depreciation provision for “qualified production property” (QPP) which is certain non-residential real property used in the manufacturing, production or refining of certain tangible personal property. The QPP provision is effective for property placed in service after July 4, 2025.
- Clean vehicle credits: The credit for qualified commercial clean vehicles terminates for vehicles acquired after September 30, 2025.
- Corporate charitable contributions: The Act imposes a new 1% floor (in addition to the 10% ceiling) on corporate charitable deductions for post-2025 tax years.
- Cost recovery for energy property: The Act eliminates 5-year MACRS classification for energy property (specific renewable and clean energy equipment, such as solar, wind, and geothermal systems) effective for property for which construction begins after 2024.
- Dependent care assistance programs: The Act increases the annual tax-free limit for amounts paid or incurred by an employer pursuant to a dependent care assistance program to $7,500 ($3,750 for a married individual filing separately). This provision is effective for tax years beginning after 2025.
- Employer-provided child care credit: Effective in 2026, the Act enhances the employer-provided child care credit by increasing the credit percentage for “qualified child care expenditures” from 25% to 40% for regular businesses, 50% for eligible small businesses. The maximum credit is $500,000 ($600,000 for eligible small businesses), subject to annual inflation adjustments beginning in 2027.
- Energy efficient commercial buildings deduction: Under the Act, the energy efficient commercial building deduction terminates for the cost of energy efficient commercial building property (e.g. interior lighting, HVAC, hot water, building envelope) whose construction begins after June 30, 2026.
- Excess business losses of noncorporate taxpayers: The Act makes the Section 461(l) limit on excess business losses permanent. The rule limits the amount of net business losses a non-corporate taxpayer can use to offset other types of income (such as wages) in as single year.
- Information reporting, Form 1099-K: The Act reverts the Form 1099-K reporting threshold back to the $20,000 and 200 transactions threshold. This repeals the previous $600 threshold.
- Information reporting, Forms 1099-NEC and 1099-MISC: For payments made after 2025, the reporting thresholds for Forms 1099-NEC and 1099-MISC are increased from $600 to $2,000 (and will be adjusted for inflation after 2026). This should decrease the number of 1099s that small businesses and landlords are required to send.
- New energy efficient home credits: The new energy efficient home credit (for home builders) terminates for any qualified new energy efficient home acquired after June 30, 2026.
- Paid Family and Medical Leave credit: The Act makes this credit permanent, for tax years after 2025. The credit is for wages paid and a portion of insurance premiums paid for employees on PFML. The Act now offers a credit for employers in states with mandated PFML laws. Employers who provide more than their state’s mandated paid medical leave can claim a tax credit on the wages and insurance premiums paid during leave in excess of state requirements.
- Qualified business income (QBI) deduction: The Act makes this deduction permanent. It also increases the taxable income limitation phase-in amounts and introduces a new minimum deduction starting in 2026. The deduction allows eligible owners of certain pass-through businesses, such as sole proprietorships, partnerships and S corporations, to deduct up to 20% of their qualified business income. The deduction was intended to provide a tax break to owners whose business income is reported on their personal returns similar to the tax rate reductions C corporations received from the Tax Cuts and Jobs Act of 2017.
- Section 179 expensing limits: For property placed in service after 2024, the Sec. 179 expensing limits are increased to $2,500,000 and the phasedown threshold is increased to $4,000,000 (subject to inflation adjustments).
