As a new year approaches, businesses need to stay informed about updated tax limits and thresholds that can affect deductions, retirement planning, and employee benefits. Below is a summary of key federal tax figures for 2026 that business owners should keep in mind. Note that special rules, exceptions, or additional limitations may apply depending on your situation.
Depreciation-Related Tax Incentives
Businesses investing in equipment, technology, or other qualifying assets may benefit from the following depreciation provisions in 2026:
- Bonus depreciation: 100%
- Section 179 expensing limit: $2.56 million
- Section 179 phaseout threshold: $4.09 million
These provisions can significantly accelerate cost recovery for qualifying purchases.
Qualified Retirement Plan Limits
Retirement plan contribution limits are increasing again for 2026, offering expanded tax-advantaged savings opportunities for both employers and employees.
Salary Deferral Limits
- 401(k), 403(b), and 457 plan deferrals: $24,500
- Catch-up contributions (age 50 or older): $8,000
- Additional catch-up contributions (ages 60–63): $3,250
SIMPLE Plan Limits
- SIMPLE plan deferrals: $17,000
- SIMPLE catch-up contributions (age 50 or older): $4,000
- Additional SIMPLE catch-up contributions (ages 60–63): $1,250
Employer-Sponsored Plan Caps
- Defined contribution plan limit: $72,000
- Defined benefit plan annual benefit limit: $290,000
Compensation Thresholds
- Highly compensated employee definition: $160,000
- Key employee (officer) threshold for top-heavy plans: $235,000
- Compensation triggering SEP contribution requirement: $800
Employee Benefit Contribution Limits
Several employee benefit limits are also adjusted for inflation in 2026:
- Health Savings Account (HSA):
- $4,400 (individual coverage)
- $8,750 (family coverage)
- Health Flexible Spending Account (FSA): $3,400
- Health FSA rollover maximum: $680
- Child and dependent care FSA: $7,500
- Employer contributions to Trump accounts: $2,500
Transportation and Parking Benefits
Employers offering commuter benefits should note the following monthly limits:
- Qualified commuter highway vehicle and transit passes: $340
- Qualified parking: $340
Other Key Business Tax Limits
Additional thresholds that may impact business tax planning include:
- Section 199A qualified business income (QBI) phase-in range:
$201,750 – $276,750
(Double these amounts for married couples filing jointly) - Excess business loss limitation threshold:
$256,000 (double for joint filers)
This represents a reduction compared to 2025. - Cash method of accounting gross receipts limit:
$32 million
(This threshold also affects eligibility for certain tax benefits, including exemption from the 30% interest expense limitation.)
Planning Ahead for 2026
Understanding how these updated tax figures apply to your business can help you identify opportunities to reduce taxes and improve cash flow. We can assist you in incorporating these and other changes into a comprehensive 2026 tax planning strategy.
Contact us today to get started.
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