Part 2: Business Tax Provisions
Whether you are an employer looking to maximize your tax deductions or an investor looking for new tax-advantaged investments, the first place you should look is at “One Big Beautiful Bill Act” (OBBBA). This major bill introduced a wide range of tax policy changes, many of which kick in this year. Some of the tax breaks your business relied on may be ending, but the good news is there are always new tax savings opportunities for those who know where to look.
Start the 2026 planning process by familiarizing yourself with the tax provisions most likely to impact business owners.
If You Often Deduct Business Meals
Deducting business meals as business expenses is hardly new, but the OBBBA places certain limits on when you can do so. First, meals provided on a business’ premises are no longer deductible if:
- They are given to an employee for the employer’s convenience (to keep them on-site), and
- They are excluded from the employee’s income
What about coffee and snacks? Back in 2019, the IRS indicated in a memo that coffee and snack stations are not eating facilities, and coffee and snacks are not considered meals. Keep an eye out for further guidance from the IRS before assuming these items can be deducted for 2026.
The second new limitation applies to employer-operated eating facilities. So if your business owns and operates a cafeteria or dining space that provides meals to employees, this is for you. Keep in mind that this includes eating facilities that you lease or that are managed for you by a third party.
Starting in 2026, expenses related to operating eating facilities, including the food and beverages themselves, are no longer deductible. There are two exceptions—meal expenses are still deductible for:
- Restaurant employees who are given meals on-site during their shifts (or similar situations where the employer sells meals to customers and the eating facility is not employee-specific)
- Certain commercial vessels and oil-and-gas rigs
If Your Business Donates to Charity
C corporations are looking at two limitations on deductions for charitable contributions: a 10% taxable income cap and a 1% taxable income floor. Let’s break these down further:
- C corporations can only deduct charitable contributions up to 10% of their taxable income
- C corporations can only deduct charitable contributions that exceeds 1% of their taxable income
Businesses that make large enough donations can still take advantage of the “carry forward” rule. If 2026 charitable contributions exceed 10% of taxable income and cannot be deducted this year, they can be carried forward to future years and deducted then.
One tax strategy that C corporations can apply is to turn their charitable contributions into a business deduction. The rules state that there needs to be a direct business relationship and an expectation of equal return. A common way to set this up is to use corporate charitable contributions as marketing. For instance, a business can advertise that 1% of their sales will be donated to charity, creating a direct link between charitable donations and increased sales.
Another strategy is to “bunch” your charitable contributions into a single year instead of spreading them out over multiple years. This can be especially effective if you are struggling to get past that 1% floor each year. Aim to donate a larger amount every two or three years instead to maximize your deduction.
If You Provide Child Care to Your Employees
If you are an employer who has set up a child care facility in your business—or you’re thinking about doing so—a bigger tax credit is now available. Starting in 2026, you can deduct up to 40% of eligible child care costs with a maximum deduction of $500,000. These new rules only apply to costs incurred after 2025.
If you are interested in providing this employee benefit but cannot afford it on your own, consider working with neighboring small businesses to set up a jointly-owned facility. Under the new tax rules, you are allowed to share the costs and share the tax credit with other business owners.
If You Plan to Deduct Business Losses Against Non-Business Income
One thing that is not changing: business owners can deduct any business losses that do not exceed their business income that year. What is changing: business owners are even more limited in how much they can deduct against non-business income.
For 2025, the excess business loss limitation is set at:
- $626,000 for married couples filing jointly
- $313,000 for other filing statuses
For 2026, this has been changed to:
- $512,000 for married couples filing jointly
- $256,000 for other filing statuses
Business losses that cannot be deducted can be carried forward, however. Keep in mind that wages are not considered business income, so that may also limit the losses you can deduct.
If You Are Looking for a Tax-Advantaged Investment Opportunity
Qualified opportunity zones (QOZs) are not new—but they are now permanent and new rules apply starting in 2027. Since 2017, governors could nominate economically distressed areas to receive a tax benefit aimed at bringing in investments. Investors in a QOZ fund are allowed to defer capital gains within 180 days of the date a gain is recognized. That can occur either:
- When the fund is sold or exchanged, or
- The date five years after the investment was made
Additionally, new incentives will be in place to encourage investors to hold onto their investments for much longer. Investors have the option to increase their basis (the original cost of purchase) over time. This can result in a major financial benefit because a higher basis means that your gain (or profit) is considered lower, and you will owe less in taxes. Under the new rules:
- After five years, the basis is increased by 10% of the deferred gain or 30% for a qualified rural opportunity fund
- After 10 years, the investor can increase the basis to fair market value on the date the investment is sold
- After 30 years, the basis is increased to the fair market value in place 30 years after the date of the investment
Summary
There are tax savings opportunities everywhere—even in a year of major tax policy changes. The OBBBA is full of nuanced tax provisions that can be difficult to understand and apply, but fortunately, that is not a journey you have to take alone. Business owners and investors can especially benefit from working with a professional to create a tax plan that factors in both current tax policy and your unique circumstances.
