2026 Tax Law Changes: What’s Different on Your 2026 Return

Jag Bains, CPA

November 1, 2026

The federal tax law signed in July 2025 (the One, Big, Beautiful Bill, which the IRS now calls the Working Families Tax Cuts) changed more of the individual and small business return than anything since 2017. Some of it already showed up on 2025 returns. More of it starts with 2026. And several of the changes reward decisions you make before December 31, not in April.

Here is what matters most for Fresno and Clovis business owners and professionals who will file 2026 returns in early 2027.

The baseline: brackets and the standard deduction

The 2017 rate structure is now permanent. For 2026 the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household. The 37% bracket starts above $640,600 of taxable income for single filers and $768,700 for joint filers.

None of that requires action on its own. It does set up the next question, because whether you itemize decides whether several of the other changes help you at all.

The SALT cap went up, with a catch above $505,000

For 2026 the deduction for state and local income, sales and property taxes is capped at $40,400 ($20,200 if married filing separately). That is far more room than the cap of recent years. For a household paying California income tax and Fresno County property tax, it puts itemizing back on the table for people who have taken the standard deduction for years.

The catch is the phase-down. Once modified adjusted gross income passes $505,000 ($252,500 married filing separately), the cap shrinks, and it can fall as low as $10,000 ($5,000 married filing separately). Higher-income owners can end up with little or none of the increase. If you own an S corporation or a partnership, California’s pass-through entity elective tax may still be the better route, and it deserves its own conversation before year-end.

New deductions you can take without itemizing

Four new deductions apply for 2025 through 2028. They are claimed on a new Schedule 1-A, whether or not you itemize:

Seniors: an additional $6,000 for each taxpayer age 65 or older, phasing out above $75,000 of modified AGI ($150,000 joint). It is on top of the existing extra standard deduction for age 65.
Qualified tips: up to $25,000, phasing out above $150,000 ($300,000 joint). It applies only to occupations on the IRS list of jobs that customarily receive tips, and not to people working in a specified service trade or business.
Qualified overtime: the premium part of overtime pay (the “half” in time-and-a-half), up to $12,500 ($25,000 joint), with the same phase-out range as tips.
Car loan interest: up to $10,000 of interest on a loan for a new, personal-use vehicle with final assembly in the United States, phasing out above $100,000 ($200,000 joint). The loan must have originated after December 31, 2024, leases do not qualify, and you have to put the VIN on your return.

For many business owners and professionals, the income phase-outs take the tips and overtime deductions off the table. Your employees may qualify, though, and the senior deduction is the one most likely to matter for a retired parent you help with taxes or a semi-retired owner.

Charitable giving: two new rules start in 2026

Starting with 2026, people who do not itemize can deduct up to $1,000 of cash gifts to qualifying charities ($2,000 married filing jointly). Gifts to donor-advised funds do not count, and neither do gifts of clothing, stock or other property.

If you do itemize, there is a new floor. Only charitable contributions above 0.5% of your adjusted gross income are deductible. At $400,000 of AGI, the first $2,000 of giving produces no deduction. Amounts lost to the floor can be carried forward.

Together, these rules make timing matter more. Bunching two years of gifts into one year, or giving appreciated stock instead of cash, can change the result. Both have to happen before December 31 to count for 2026.

A new limit on itemized deductions in the top bracket

If your taxable income reaches the 37% bracket, your itemized deductions are now reduced. The 2026 Form 1040-ES describes the reduction as 5.4% of the lesser of your total itemized deductions or the amount by which taxable income exceeds $640,600 (single or head of household) or $768,700 (married filing jointly). In practice it trims what each itemized dollar is worth to a top-bracket filer. It is one more reason high earners should run the itemize-or-not question with real numbers, which we covered in personal tax planning for high-income Fresno professionals.

Business changes that show up on 2026 returns

Bonus depreciation: 100% first-year depreciation is permanent for qualified property acquired after January 19, 2025.
Section 179: the expensing limit is $2,500,000, reduced once qualifying purchases pass $4,000,000, and both amounts are indexed for inflation after 2025.
Domestic research costs: for tax years beginning after 2024, domestic research and experimental expenses can again be deducted in the year paid instead of being capitalized and amortized.
QBI deduction: the qualified business income deduction is now permanent. Starting in 2026 there is a minimum deduction of $400 if you have at least $1,000 of qualified business income from an active business, and the phase-in range widens to $75,000 ($150,000 joint).
1099 thresholds: for payments made in 2026, the threshold for Form 1099-NEC and most Form 1099-MISC boxes rises to $2,000. Payment apps and online marketplaces have to send Form 1099-K only when payments exceed $20,000 across more than 200 transactions.
Trump accounts as a benefit: employers can contribute up to $2,500 a year toward an employee’s or dependent’s Trump account, generally deductible to the business and excluded from the employee’s income.

We walked through how the depreciation and expensing rules play out in practice in small business tax deductions you’re probably missing in 2026.

Credits that are gone

The new and used clean vehicle credits ended for vehicles acquired after September 30, 2025. The energy efficient home improvement credit ended for property placed in service after December 31, 2025, and the residential clean energy credit ended for expenditures made after that date. If you were counting on one of these for 2026, it is not there.

Families: dependent care and Trump accounts

For 2026 the maximum child and dependent care credit rate rises from 35% to 50% of qualifying expenses. The expense limits stay at $3,000 for one qualifying person and $6,000 for two or more, and your actual rate depends on income.

Trump accounts, a new IRA-style account for children, began accepting contributions on July 4, 2026. Individuals and employers together can contribute up to $5,000 a year. Eligible children born from 2025 through 2028 can receive a one-time $1,000 federal pilot contribution, and the election is made on Form 4547.

What to do before December 31

Run a 2026 projection with the new SALT cap and decide whether you will itemize.
Time charitable gifts with the 0.5% floor and the new non-itemizer deduction in mind.
If you are close to a phase-out (the $505,000 SALT threshold or the Schedule 1-A ranges), look at whether pre-tax retirement contributions or income timing keep you under it.
Confirm that any equipment you plan to deduct will be placed in service by year-end.
Collect W-9s now from anyone you expect to pay $2,000 or more for services.

See how the new rules land on your numbers

We have worked with Fresno and Clovis business owners and professionals for more than eight years, and a law change this broad is where planning earns its keep. If you want to see how these rules affect your own 2026 return, book a free 30-minute call through our contact page. We can meet in person at our Fresno office or talk by phone, and you can read more about our personal tax preparation work.

Harlan Willow Accounting Group · 7257 N Maple Ave STE 107, Fresno, CA 93720 · 559-372-9213

This post is general information, not tax advice for your specific situation. Figures are for tax year 2026 as published by the IRS and may change with new guidance.