The 3 biggest tax breaks available to new businesses in 2026 all come from the same source: the One Big Beautiful Bill Act (OBBBA). It made permanent 100% bonus depreciation, expanded the Section 179 deduction limit to USD 2,560,000, and locked in the 20% Qualified Business Income deduction with a new guaranteed minimum. These are not temporary incentives to plan around — they are the permanent baseline going forward.
100% bonus depreciation — the immediate write-off is back
Before the OBBBA, bonus depreciation had been phasing down — 80%, 60%, 40% — creating a planning headache for businesses buying equipment. That phase-down is gone. The OBBBA reinstated and permanently established 100% bonus depreciation for qualified property acquired and placed in service after January 19th of 2025.
What that means in practice: a new business that purchases USD 50k in equipment, machinery, or qualifying software in 2026 can deduct the full USD 50k in year one. No depreciation schedule. No multi-year recovery. The entire cost hits the current-year return.
This is particularly valuable in the first 12 to 24 months of operation, when equipment purchases are front-loaded and revenue may not yet be at full capacity. The deduction lower taxable income immediately — which matters most when you are still building cash reserves.
Section 179 — the expanded ceiling for 2026
Section 179 has always allowed businesses to expense qualifying assets immediately — rather than depreciate them over time. The deduction limit increased to USD 2,560,000. The dollar-for-dollar phase-out begins at USD 4,090,000 in total asset additions — a threshold most new businesses will not approach.
Section 179 and bonus depreciation overlap in function but differ in mechanics. Section 179 is elected, capped, and cannot create a net operating loss. Bonus depreciation has no cap and can push a return into a loss position that carries forward. For new businesses with modest initial revenue, the sequencing of which to apply first can impact multiple tax years. That sequencing is a planning decision — not a default.
The QBI deduction
The 20% Qualified business income deduction under Section 199A was originally set to expire at the end of 2025. The OBBBA made it permanent. For a new business owner generating USD 100k in qualifying pass-through income, that is a potential USD 20k deduction against ordinary income — without spending a dollar.
The OBBBA also introduced a new USD 400 minimum QBI deduction for active business owners generating at least USD 1,000 in qualifying income. Small in dollar terms, but it signals that the deduction now has a floor as well as a ceiling. The 2026 phase-out for Specified Service Trade or Business owners starts at approximately USD 203k for single filers and USD 406k for married filing jointly.
if you are also evaluating an S-Corp election, the W-2 salary level directly impacts the QBI base. A higher salary reduces pass-through income — which lowers the deduction. This push-pull is one of the central modeling questions in LLC vs S-Corp taxes in 2026, and it has no one-size answer.
How these 2026 tax deductions interact with your entity choice
All three — bonus depreciation, Section 179, and the QBI deduction — apply regardless of whether the business is a default LLC or an S-Corp. Entity structure affects how the income flows and how much is subject to self-employment tax. It does not determine eligibility for these deductions.
The practical question is how to sequence and combine them against the actual 2026 income, asset purchases, and compensation structure. For a new business, that planning conversation should happen before year-end — not during filing season.
You can check how these deductions interact with your entity choice with our full analysis at LLC vs S-Corp Taxes 2026 — or contact Wasserman Accounting to build the projection against your specific numbers.
