Three Tax Rules Just Became Permanent — Here’s How That Should Change Your Q3 Planning

For the past several years, business tax planning in the U.S. has been a game of chicken with the calendar. Bonus depreciation was phasing down. The 20% Qualified Business Income deduction was set to expire at the end of 2025. Owners rushed equipment purchases into December and made decisions based on rules that might not exist the following year. That era just ended.

Legislation passed last year made three of the most consequential business tax provisions permanent, and the practical effects are now showing up in how South Shore business owners should be approaching the second half of 2026.

Bonus depreciation is back to 100%, permanently. You can now deduct the full cost of qualifying equipment, machinery, vehicles, and certain building improvements in the year you place them in service, with no scheduled phase-down hanging over the decision. That removes the “buy before December 31 or lose the deduction” pressure that used to distort purchase timing. Equipment decisions can now be made when the business actually needs the equipment, not when the tax code demands it.

The Section 199A Qualified Business Income deduction is permanent too. That’s the 20% deduction that pass-through owners — S corps, partnerships, sole proprietors — have relied on since 2018, and it was one signature away from disappearing at the end of last year. It didn’t. The phase-in ranges for service businesses and other limited categories were also widened, from $50,000 to $75,000 for single filers and $100,000 to $150,000 for joint filers, giving more owners room to qualify for the full deduction as income grows.

Section 179 expensing went up too, to roughly $1.32 million, with the phase-out now starting after $3.29 million in qualifying purchases. For most South Shore small businesses, that ceiling was never the binding constraint — but combined with permanent bonus depreciation, it means almost any reasonable equipment or property investment this year gets full, immediate tax treatment.

Why permanence actually matters more than the numbers

It’s tempting to read this as a list of bigger deductions and move on. The more important shift is what permanence does to the kind of planning you can actually do. When a deduction might vanish next year, you make defensive, short-term decisions. When it’s locked in, you can plan multi-year around it. That opens up three conversations worth having before Q3 closes:

Entity structure. Whether you’re organized as an S corp, LLC, or sole proprietorship changes how the QBI deduction and your overall tax exposure interact with growth. A structure that made sense three years ago, under different rules and a different revenue level, may not be the most efficient one now that the deduction is permanent.

Owner compensation levels. For S corp owners in particular, the balance between reasonable salary and distributions directly affects QBI eligibility through the wage limitation. Getting that balance right is a recurring conversation, not a once-and-done setting.

Capital expenditure timing. With bonus depreciation no longer phasing down, equipment and property purchases can be sequenced around actual operating need and cash flow — a new truck when the old one needs replacing, not because December is approaching.

None of these are one-time decisions you make once and forget. They’re the kind of ongoing, numbers-driven judgment calls that fall through the cracks when an owner is running the business day to day and only looking at the P&L once a quarter — which is exactly the gap fractional CFO support is built to close.

At BKI, this is where we spend most of our time with clients: not just closing the books, but translating rule changes like this one into an actual financial plan — entity and compensation decisions, capital budgets, and forecasts that hold up when the numbers change. With three major provisions now permanent, Q3 is the right moment to revisit assumptions that were built around rules that no longer apply.

If you want a second set of eyes on how these changes affect your entity structure, compensation strategy, or capital plans for the rest of the year, reach out for a tailored engagement outline.