Wealthy & Wise: New Tax Strategies for 2026

Whether you’re a small business owner or a high-income investor, 2026 gives you new opportunities to reduce your tax bill. On the latest episode of NCH’s Wealthy & Wise, Adam Kintigh and David Vanlandingham discussed four new strategies you can use to get potential tax savings, including those under the One Big Beautiful Bill (OBBB).

To learn more about these tax planning strategies for small businesses and investors, watch the video above or keep reading for a quick rundown.

Key Takeaways

• Small business owners and high-income investors can use several new strategies to reduce their taxable income in 2026.
• Under the One Big Beautiful Bill, 100% bonus depreciation is now permanent. Thus, businesses can immediately write off qualifying property with a useful life of 20 years or less.
• The limit for the SALT (state and local tax) deduction has been increased to $40,000. It offers substantial relief to taxpayers in high-tax states.
• Recent tax law changes also include new transportation-related benefits.
  • If you own an American-made vehicle that’s “new to you,” you can deduct 100% of the interest on it.
  • The Internal Revenue Service (IRS) has increased its business standard mileage rate to 72.5 cents per mile.
• Owners of LLCs taxed as sole proprietors (“disregarded entities”) can save on self-employment taxes by electing S corporation status. However, the election must be made at the right time.

100% Bonus Depreciation: Now Permanent

First, 100% bonus depreciation has been made permanent for 2026. Business owners can claim this deduction for qualified property they’ve acquired and placed in service after January 19, 2025.

Before this change, company property had to be depreciated over multiple years. As a result, taxpayers gained only limited short-term tax savings. But with the OBBB making 100% bonus depreciation permanent, you can write off eligible company property immediately. This can lead to more cash flow and a lower tax bill.

However, as David notes, the 100% bonus depreciation only applies to asset classes of 20 years or less. It won’t cover assets that you’ve used for over 20 years.

A Note on Bonus Depreciation for Rental Property Owners

To claim the Section 179 deduction, many rental property owners with high W-2 income can take the 100% bonus depreciation option.

Generally, real estate is viewed as passive income, so it doesn’t offset passive losses. But some people consider working as a real estate professional an exception to that rule. Adam explains that he has clients who bought property, converted it into an Airbnb, realized substantial savings, and hired a property manager. This strategy makes 100% bonus depreciation attractive to rental property owners.

An Increase in the SALT Deduction

If you live in a high-tax state, consider taking the SALT (state and local tax) deduction. The cap for this deduction has been increased to $40,000 in 2026, a huge leap from the previous limit of $10,000. This change benefits not only residents of high-tax states but also taxpayers with properties in those areas.

To take advantage of this change to the SALT deduction, Adam advises talking to your CPA or tax professional first. These experts can help you find ways to bypass the limitations associated with the deduction. And if you run an S corporation or partnership, a CPA or tax advisor can tell you how to reduce your business tax liability in a high-tax state.

New Tax Benefits Related to Transportation & Vehicles

Another new strategy you can use to lower your tax bill is deducting interest on an American-made vehicle. Taxpayers can now deduct 100% of the interest paid on a used (“new-to-you”) car manufactured in the U.S. David notes that this deduction can cover leases, but it applies to more complex situations.

Moreover, the IRS has increased its business standard mileage rate for 2026. The rate has increased to 72.5 cents per mile driven for business use, with owners of gasoline- and diesel-powered, fully electric, and hybrid vehicles benefiting. David sees the change as a significant opportunity for businesses to increase revenue.

Note: The business standard mileage rate set by the IRS is based on an annual study of the fixed and variable costs of operating a vehicle.

The S Corporation Election for LLCs

Although electing S corporation status has always been an option for LLCs, some entrepreneurs overlook it.

An LLC is treated as a “disregarded entity” for federal income tax purposes. The entity is part of its owner’s personal tax return, with business profits and losses reported there. Plus, if you run a single-member LLC, you’re subject to self-employment tax on your net earnings. The current rate is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare.

The 12.4% rate on Social Security taxes is paid on the first $184,500 of your combined wages, tips, and net earnings. Still, it can increase your tax burden. With your LLC taxed as an S corporation, you can lower your tax bill by paying yourself a reasonable salary.

If you decide to file an S corporation election, you must do so at the right time. You can make the election within 75 days from the date of your LLC’s incorporation or the end of the current tax year.

Frequently Asked Questions

What is the One Big Beautiful Bill (OBBB)?

The One Big Beautiful Bill is a new law containing major changes to federal taxes, credits, and deductions. These changes include the permanent duration of the 100% bonus depreciation option for qualified business property.

Ultimately, the OBBB gives small business owners and investors new opportunities to reduce their taxable income in 2026.

How does the OBBB impact pass-through business entities?

The OBBB benefits pass-through business entities by expanding existing tax benefits and introducing new ones. Taking advantage of these benefits can help LLCs, S corporations, and other pass-through business entities lower their tax burden.

How does the 100% bonus depreciation option work?

Under the OBBB, businesses can use 100% bonus depreciation to deduct the full cost of qualifying company property immediately. This option applies to certain assets purchased and placed in service after January 19, 2025.

Which types of business assets are covered by the 100% bonus depreciation option?

Business assets that have been used for 20 years or less are covered by the 100% bonus depreciation option. They may include items such as computers or office furniture, provided they meet the condition stated above.

Other qualifying assets include:

• Depreciable computer software
• Water utility property
• Qualified improvement property
• Costs of certain film, television, and live theatrical productions

How can rental property owners use the 100% bonus depreciation option?

Rental property owners can use the 100% bonus depreciation by working as a real estate professional or offering short-term rental services. Any of these strategies will allow you to offset passive losses from real estate investments.

How does the SALT deduction help taxpayers in high-tax states reduce their tax burden?

The SALT deduction is now capped at $40,000. Hence, taxpayers in high-tax states can keep more of their income.

Still, limitations apply. Working with a CPA can help you maximize this deduction and find specific workarounds for you and your business.

Why should an LLC elect S corporation status?

An LLC should elect S corporation status because it can help its owner(s) save on self-employment tax.

LLCs taxed as S corporations can pay their owners a reasonable salary that’s subject to payroll taxes. Additionally, any remaining profits are distributed as dividends. FICA tax doesn’t apply to these distributions.

When should an LLC file an S corporation election?

An LLC must file an S corporation election:

• Within 75 days from the company’s formation OR
• Within 75 days from the end of the previous tax year

If you make the election once any of these deadlines have passed, you’ll miss out on potential tax savings.

When should I use the new tax strategies for 2026?

Consider using the new tax strategies for 2026 now. Waiting until the next tax season begins may limit your options to reduce your taxable income. When you work with NCH’s tax professionals, you’ll learn how to save on taxes to take more of your earnings.

How can a tax expert help me reduce my tax bill?

A tax expert can help you reduce your tax bill by assessing your current situation and identifying effective strategies. They’ll discuss the deductions you can claim and other benefits you can use to reduce your taxable income.

Furthermore, a tax expert will explain how you should complete and file your tax return for continued compliance.

Lower Your Taxable Income with Effective Strategies

Proper planning is key to using the new tax strategies mentioned above. A trusted tax professional will help you understand federal tax law changes for 2026 and take the best steps to reduce your tax bill.

If you’re after more tax savings, schedule a consultation with NCH’s tax experts today.

Contact Our Tax Consultants Now

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.