The One Big Beautiful Bill Act (OBBBA) reshaped the 2026 small-business tax landscape: the 20% QBI deduction is now permanent, the corporate rate stays at 21%, and several limits moved. Here is the owner-ready summary.
Direct answer
For 2026: the QBI 20% pass-through deduction is permanent, the corporate rate stays 21%, the Social Security wage base is $184,500, and the SALT deduction cap is $40,400 (joint). New temporary breaks also exempt up to $25,000 of tips and overtime premium pay from federal income tax (2025–2028).
2026 key small-business tax figures
| Item | 2026 value | Notes |
|---|---|---|
| QBI (Section 199A) deduction | 20% (permanent) | Pass-through businesses |
| Corporate income tax rate | 21% | C-corporations |
| Social Security wage base (FICA) | $184,500 | 6.2% each side up to cap |
| Medicare tax | 1.45% (no cap) | +0.9% above $200k / $250k |
| SALT deduction cap | $40,400 (joint) / ~$20,200 (single) | State + local taxes combined |
| No-tax-on-tips | up to $25,000 | Federal income tax only, 2025–2028 |
| No-tax-on-overtime | overtime premium exempt | Federal income tax only, 2025–2028 |
What it means for you
- Pass-through owners (Schedule C / S-corp): the permanent 20% QBI deduction is the headline win — plan around it when choosing entity type.
- Payroll: withhold Social Security only up to $184,500 of each employee's wages; Medicare continues above that.
- Itemizers in high-tax states: the $40,400 SALT cap still limits the benefit versus pre-2018 rules.
- Tipped / hourly staff: the temporary tip and overtime exclusions reduce federal income tax but not FICA.
Educational content, not tax advice. Cashbizly is an independent educational resource. Nothing here is personalized advice, and it does not replace a licensed CPA, Enrolled Agent, or tax attorney.
Our calculators and articles are checked for accuracy against official IRS publications, including Publication 334 (Tax Guide for Small Business), 535 (Business Expenses), 505 (Withholding & Estimated Tax), and 463 (Travel, Gift & Car Expenses). Tax rules change — always confirm current figures at IRS.gov or with a professional. Read our full disclaimer.
Frequently asked questions
Under the OBBBA, the Section 199A qualified business income (QBI) deduction — up to 20% of qualified pass-through income — is made permanent. Previously it was scheduled to expire after 2025. Eligibility rules (the 20% deduction, phase-ins for specified service trades, and the wage/property limits) generally continue as before.
The Social Security taxable wage base rises to $184,500 in 2026. Employees and employers each pay 6.2% Social Security tax up to that cap; the 1.45% Medicare tax has no cap (plus the 0.9% Additional Medicare Tax above $200k / $250k). Self-employed individuals pay the full 12.4% (up to the cap) plus 2.9%.
The state and local tax (SALT) deduction cap is $40,400 for married couples filing jointly in 2026 (about $20,200 for single filers) under the OBBBA changes. This is the limit on the federal itemized deduction for state and local income, sales, and property taxes combined.
No. The federal corporate income tax rate remains 21% under the OBBBA. C-corporations continue at the 21% rate.