The One Big Beautiful Bill Act (OBBBA) reshapes the rules that followed the 2017 Tax Cuts and Jobs Act, especially for Michigan businesses. 2026 is the year entity choice, expensing, credits and state rules all need a fresh look.
1. Re test your choice of entity under permanent QBI
The 20% Qualified Business Income (QBI) deduction for non corporate taxpayers is now permanent. This changes the math on C corp versus pass through, so model after tax cash to owners after QBI, reasonable compensation and planned distributions – not pre 2026 sunset scenarios.
2. Take advantage of revived and enhanced expensing
OBBBA restores and makes permanent 100% bonus depreciation for many types of equipment and again allows immediate expensing of domestic R&E costs, alongside higher section 179 limits for smaller businesses. The timing of capital expenditures becomes a major planning lever, letting many businesses fully expense qualifying investments in the year placed in service.
3. Re evaluate leverage in light of the updated interest limitation
Beginning in 2026, the business interest limitation calculation again adds back depreciation and amortization to adjusted taxable income. For capital intensive, debt heavy companies, this can unlock more deductible interest.
4. Modernize your 1099 and worker classification practices
Some information reporting thresholds (like 1099 K and 1099 NEC) increase, but the obligation to properly classify workers and report payments does not. Use the higher thresholds to clean up independent contractor policies, platform payment arrangements, backup withholding procedures and e filing workflows.
5. Leverage expanded credits for childcare, clean fuel and community investment
OBBBA enhances employer childcare credits, clean fuel incentives and programs such as the Low Income Housing Tax Credit and New Markets Tax Credit. Childcare credits can now cover a larger share of qualifying costs with higher caps. Treat benefits like childcare, clean fleets or community projects as tax advantaged investments, not just expenses.
6. Prepare for the refresh of Opportunity Zones
Opportunity Zones are now a permanent feature of the code with new zones starting in 2027. If you’re considering reinvesting appreciated gains, pay close attention to deadlines and transition rules. Existing projects must be evaluated against expiring designations, while future deals may benefit from new, possibly more rural zones.
7. For Michigan employers, integrate 2026 wage and deduction changes
Michigan’s higher minimum wage and new state deductions for qualified tips and overtime hinge on federal definitions and accurate reporting. Update payroll systems, timekeeping and employee communications so staff understand why certain wage components are taxed differently at the state level.
8. Price for new Michigan excise and fuel taxes
Michigan replaces the 6% sales tax on gasoline with a higher per gallon fuel tax dedicated to roads and adds a substantial wholesale excise tax on recreational marijuana. Fleet intensive businesses, logistics operators and cannabis companies should re run pricing, margin and entity structuring models to avoid over or under correcting.
9. Integrate estate, succession and QSBS planning with the new baseline
OBBBA’s relatively high estate tax exemption and closely held business relief interact with qualified small business stock rules for C corps. Coordinate buy sell agreements, recapitalizations, equity incentives and estate plans so modest structural changes today can materially improve after tax outcomes on future exits or generational transfers.
10. Invest in tax technology and documentation
Return complexity will increase as OBBBA provisions interact with existing rules and new credits. Treat 2026 as the point to integrate accounting, payroll and tax systems so data flows cleanly and documentation is contemporaneous.
Bonus tip: When in doubt, consult a tax professional
With major new provisions, evolving guidance and a likely spike in notices, 2026 is a year when engaging a tax professional or CPA for proactive planning can prevent costly mistakes and capture available opportunities.
Author
Joseph A. Peterson, Senior Attorney
38505 Woodward Ave., Suite 100
Bloomfield Hills, MI 48304
T:Â (248) 433-7158
F:Â (248) 901-4040
jpeterson@plunkettcooney.com
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