2026 Business Tax Limits and Updates: What You Need to Know

A new year brings new numbers and for business owners, those numbers can directly affect your tax strategy, deductions, and compliance. Whether you’re planning capital investments or managing employee benefits, staying up to date on the 2026 tax limits for businesses is critical.

The tax professionals at THF (formerly Thomas Howell Ferguson) break down the most important 2026 tax figures for businesses, from depreciation to retirement plan updates and more.

2026 Depreciation and Section 179 Limits

Good news for businesses investing in equipment or property:

• Bonus Depreciation (2026): 100%
• Section 179 Expensing Limit: $2.56 million
• Phase-Out Threshold: $4.09 million

To claim these deductions, qualifying assets must be placed in service by December 31, 2026.

Learn more about Section 179 from the IRS

Retirement Plan Contribution Limits for 2026

Planning to boost employee retirement benefits or maximize your own deductions? Here are the updated numbers:

401(k), 403(b), and 457 Plans

• Annual Deferral Limit: $24,500
• Catch-Up (Age 50+): $8,000
• Additional Catch-Up (Ages 60–63): $3,250

SIMPLE IRA Plans

• Deferral Limit: $17,000
• Catch-Up (Age 50+): $4,000
• Additional Catch-Up (Ages 60–63): $1,250

Defined Contribution Plans

• Contribution Limit: $72,000

Defined Benefit Plans

• Annual Benefit Limit: $290,000

Compensation limits:

• Highly Compensated Employee: $160,000
• Key Employee in Top-Heavy Plan: $235,000
• Compensation Triggering SEP Contributions: $800

2026 HSA, FSA, and Commuter Benefit Limits

Maximize your benefits and reduce taxable income with updated 2026 limits:

• Health Savings Account (HSA):
  • Individual: $4,400
  • Family: $8,750
• Health Flexible Spending Account (FSA):
  • Contribution Limit: $3,400
  • Rollover Limit: $680
• Dependent Care FSA: $7,500
• Employer Contributions to Trump Account: $2,500
• Commuter Benefits (Monthly):
  • Transit/Vehicle: $340
  • Parking: $340

Section 199A & Other Business Tax Thresholds

Be mindful of thresholds that affect eligibility for key deductions:

• Qualified Business Income (QBI) Deduction Phase-In Range:
  • $201,750 – $276,750 (double for joint filers)
• Excess Business Loss Limitation:
  • $256,000 (single), $512,000 (joint)
  • Note: This is a reduction from 2025
• Cash Method of Accounting Threshold:
  • Gross receipts limit: $32 million

These figures also influence other tax provisions, including the 30% interest expense deduction limit.

Plan Ahead with THF

Tax planning is more than just meeting deadlines. It’s about taking action with the right numbers at the right time.

At THF, we help business owners:

• Apply limits accurately
• Maximize deductions
• Stay compliant with IRS changes

📞 Contact us or visit www.THF.cpa to speak with a business tax advisor today.