The IRS dropped some important updates in early February 2026 that every small business owner should know about. New inflation-adjusted tax brackets, a bumped-up standard deduction, and an expanded Tax Pro Account that changes how your accounting team works with your tax preparer.
Let us break down what matters and what you should do about it.
The 2026 Tax Bracket Adjustments
Every year, the IRS adjusts tax brackets for inflation. For 2026, the changes are meaningful:
The 37% top rate now kicks in at $640,600 for single filers and $768,700 for married couples filing jointly. The standard deduction rises to $16,100 for individuals and $32,200 for married couples.
For business owners, this means slightly more room before you hit higher brackets. If your taxable income lands near a bracket threshold, even a small shift can save real money.
Why This Matters for Pass-Through Businesses
If you run an S-Corp, LLC, or sole proprietorship, your business income flows through to your personal return. These bracket adjustments directly affect how much tax you pay on business profits.
Here is a practical example. A business owner with $200,000 in taxable income will pay roughly $600 less in federal taxes in 2026 compared to 2025, purely from bracket inflation adjustments. That is not life-changing, but it adds up, especially when combined with smart planning.
The New IRS Tax Pro Account
This one flew under the radar for most business owners, but it matters. The IRS expanded its Tax Pro Account system in February 2026, giving accounting firms and tax preparers broader digital access to client information.
What this means for you: faster communication between your accountant and your tax preparer. Less paperwork. Fewer delays during tax season. Your accounting team can now share financial data with your CPA through more streamlined digital channels.
For NexGen clients, this is a direct improvement. We already coordinate closely with your tax preparer. These new tools make that coordination faster and more efficient.
Three Things to Do Right Now
1. Review Your Estimated Tax Payments
If you set your 2026 quarterly estimates based on 2025 brackets, they may be slightly high. Talk to your tax professional about whether an adjustment makes sense. Overpaying estimates ties up cash you could use in the business.
2. Revisit Your Entity Structure
With updated brackets, the math on S-Corp elections may have shifted for some businesses. If your LLC is generating consistent profits above $50,000 and you have not evaluated S-Corp status, this is a good time to run the numbers with your CPA.
3. Take Advantage of the Higher Standard Deduction
If you are a sole proprietor who takes the standard deduction, the increase to $16,100 means slightly more tax-free income. But if your itemized deductions are close to that number, it is worth checking whether itemizing still makes sense.
The Bigger Picture
These are incremental changes, not dramatic overhauls. But incremental changes compound. A few hundred dollars saved on bracket adjustments, combined with smarter entity planning and proactive estimated payments, can add up to thousands over the course of a year.
The business owners who benefit most are the ones who pay attention to these details early rather than discovering them at tax time.
What We Are Doing for Our Clients
We are updating all client financial models to reflect the 2026 brackets. If you are a NexGen client, your monthly reports and projections will automatically incorporate these changes. If you are not a client yet and want help understanding how these updates affect your business, we are happy to walk through it.
Important: NexGen does not prepare tax returns or provide tax advice. We keep your books accurate and your financial data organized so your CPA can make the best decisions for your tax situation. These bracket changes are informational. Talk to your tax professional about your specific circumstances.