As 2026 begins, business owners and financial leaders need to be aware of several important tax figures that impact deductions, benefits, retirement plans, and overall tax strategy. Understanding these updated limits can help you make smarter planning decisions and avoid surprises at tax time. Below is an overview of the most relevant 2026 business tax thresholds and contribution limits. Keep in mind that specific rules, exceptions, and eligibility requirements may apply depending on your situation.
Depreciation and Business Investment Incentives
Businesses purchasing equipment, technology, or other qualifying assets in 2026 may benefit from the following depreciation-related provisions:
- Bonus Depreciation: 100%
- Section 179 Deduction Limit: $2.56 million
- Section 179 Phase-Out Threshold: $4.09 million
These provisions may provide significant cash-flow advantages for companies investing in expansion, modernization, or capital equipment.
Qualified Retirement Plan Contribution Limits
Helping employees save for retirement remains a strong tax-advantaged strategy. For 2026, the limits include:
- 401(k), 403(b), and 457 Plan Deferrals: $24,500
- Catch-Up Contribution (Age 50+): $8,000
- Additional Catch-Up (Ages 60–63): $3,250
- SIMPLE IRA Deferrals: $17,000
- SIMPLE IRA Catch-Up (Age 50+): $4,000
- Additional SIMPLE Catch-Up (Ages 60–63): $1,250
- Defined Contribution Plan Limit: $72,000
- Defined Benefit Plan Annual Benefit Limit: $290,000
- Highly Compensated Employee Compensation Threshold: $160,000
- Key Employee (Top-Heavy Plan) Compensation Threshold: $235,000
- Compensation Trigger for SEP Contributions: $800
These adjustments can impact benefit plan design, nondiscrimination testing, and executive compensation planning.
Health and Fringe Benefit Contribution Limits
Health and wellness benefits continue to offer meaningful tax savings for both employers and employees:
- Health Savings Account (HSA) Contributions: $4,400 for individual coverage, $8,750 for family coverage
- Health Flexible Spending Account (FSA) Contributions: $3,400
- FSA Carryover Allowance: $680
- Dependent Care FSA Contribution Limit: $7,500
- Monthly Commuter and Transit Benefit: $340
- Monthly Qualified Parking Benefit: $340
Some benefit programs may have additional eligibility or plan-specific requirements that businesses should review carefully with their advisors.
Other Key Business-Related Tax Thresholds
- Section 199A Qualified Business Income Deduction Phase-In Range: $201,750 – $276,750 (double for joint filers)
- Excess Business Loss Limitation Threshold: $256,000 (double for joint filers)
- Gross Receipts Threshold for Use of Cash Accounting Method: $32 million
This threshold also affects related rules, including certain interest expense deduction limitations.
Why These 2026 Tax Changes Matter for Your Business
These updated figures can influence:
- Capital investment decisions
- Retirement and benefits planning
- Tax deductions and cash-flow strategy
- Entity structure and compensation planning
- Long-term financial projections
Proactive tax planning is essential, especially in a year with evolving thresholds, potential legislative adjustments, and increased IRS enforcement activity.
Plan Ahead for 2026 With Expert Tax Guidance
The right strategy can help your business maximize deductions, reduce tax exposure, and remain compliant with complex IRS rules. The professionals at Botwinick & Co. can help you evaluate how these 2026 tax changes apply to your business and develop a forward-looking plan tailored to your goals.
Contact us today to get started on your 2026 tax planning.
