Running a small business in Northern Virginia or the District means juggling two sets of tax obligations at once — federal rules that just underwent their biggest overhaul in years, and state or local requirements that differ depending on where your business is registered and where it earns income. The good news for 2026: several federal changes under the One Big Beautiful Bill Act (OBBBA) are meaningfully more generous for small business owners than the rules that applied just two years ago. The challenge is knowing which ones apply to your specific structure and making sure you have the documentation to back up every deduction you claim. Why 2026 Is a Pivotal Year for Small Business Taxes The OBBBA, signed into law in July 2025, made permanent several provisions that were previously set to expire or phase down, and it increased limits on some of the deductions small businesses rely on most. If you’ve been putting off equipment purchases, restructuring your entity, or reviewing your bookkeeping practices, 2026 is a good year to revisit all three. Section 179 Expensing: Bigger Limits for 2026 Section 179 of the Internal Revenue Code lets businesses deduct the full purchase price of qualifying equipment and software in the year it’s placed in service, rather than depreciating it over several years. For 2026, the IRS’s inflation-adjusted limits under Revenue Procedure 2025-32 are: Maximum deduction: $2,560,000 Phase-out threshold: $4,090,000 — the deduction begins phasing out dollar-for-dollar once total qualifying purchases exceed this amount Heavy SUV cap: $32,000 for vehicles between 6,000 and 14,000 pounds gross vehicle weight rating This is roughly double the pre-OBBBA limit, which capped out around $1.25 million with a phase-out beginning at $3.13 million. If your business is planning to buy equipment, vehicles, or software this year, these higher limits make it considerably easier to fully expense the purchase in the year you buy it rather than spreading the deduction across multiple tax years. Bonus Depreciation Is Back to 100% — Permanently Before OBBBA, bonus depreciation was on a scheduled decline — 80% in 2023, 60% in 2024, and 40% in 2025 under prior law. The OBBBA reset bonus depreciation to 100%, retroactive to property placed in service on or after January 19, 2025, and removed the scheduled phase-down entirely. In practical terms, that means qualifying assets — machinery, equipment, certain vehicles, and specific building improvements — can be fully expensed in the year they’re placed in service, with no multi-year depreciation schedule required. Section 179 and bonus depreciation are frequently used together. Section 179 is applied first, followed by bonus depreciation, and the ordering matters for how much you can deduct in a given year versus carrying forward. This is an area where working with a CPA pays for itself — timing a large equipment purchase in December versus January, for example, can shift a five- or six-figure deduction from one tax year to the next. The Qualified Business Income (QBI) Deduction Is Now Permanent The Section 199A Qualified Business Income deduction — which allows owners of pass-through entities (sole proprietorships, partnerships, S-corporations, and most LLCs) to deduct a portion of their qualified business income — was scheduled to expire after 2025. The OBBBA made it permanent starting in 2026. Two additional changes are worth noting for 2026: A new $400 minimum deduction now applies to any taxpayer with at least $1,000 in qualified business income, effective for tax years beginning after December 31, 2025. The phase-in ranges for the deduction have been adjusted, with 2026 thresholds around $201,750 for single filers and $403,500 for joint filers before phase-outs begin. If you operate as a sole proprietor, partnership, or S-corp, this deduction can meaningfully reduce your effective tax rate on business income — but claiming it accurately requires clean, well-documented books. Guesswork here is one of the more common triggers for IRS correspondence. The 1099 Reporting Threshold Just Tripled One of the more overlooked OBBBA changes for small businesses: the reporting threshold for Form 1099-NEC and certain Form 1099-MISC payments rose from $600 to $2,000, beginning with the 2026 tax year. This means you generally won’t need to issue a 1099 to a contractor or vendor unless you paid them $2,000 or more during the year. Two important caveats: the income itself is still fully taxable and reportable by the recipient even if no 1099 is issued, and this threshold will be adjusted for inflation in future years. Don’t let a lower 1099 count lull you into thinking recordkeeping matters less — the IRS still expects your books to reflect every payment. Employer-Provided Childcare Credit Expansion If your business offers or is considering offering childcare benefits to employees, the OBBBA significantly expanded this credit for 2026. The maximum employer-provided childcare tax credit increased from $150,000 to $500,000, and up to $600,000 for businesses that qualify as an eligible small business. This is a meaningful incentive for employers competing for talent in the DMV’s tight labor market, where childcare access is frequently cited by employees as a top concern. What Changed for Business Meals and Fringe Benefits The OBBBA also narrowed deductibility for certain on-premises meals provided to employees, with new exceptions to what had previously been a broadly deductible category. If your business provides regular meals, snacks, or catering as an employee benefit, it’s worth having your accountant review which categories still qualify for a full or partial deduction under the new rules, since blanket assumptions from prior years may no longer hold. Virginia-Specific Business Tax Considerations Virginia businesses should keep a few state-specific details in mind heading into the 2026 filing season: Estimated tax payment threshold increase. Virginia raised its estimated tax payment threshold from $150 to $1,000, which eases quarterly filing burdens for freelancers, sole proprietors, and small business owners who previously had to make estimated payments on relatively modest amounts of income. Sales tax holiday. Virginia’s annual sales tax holiday runs August 1–3, 2026, covering school supplies, clothing, and energy-efficient products — useful timing information if your
Tax season has a way of sneaking up on people, and 2026 is no exception. Between a new federal tax law that’s reshaping deductions and credits, a Virginia rebate program with its own filing deadline, and a District of Columbia tax calendar that doesn’t always match the federal one, Northern Virginia and D.C.-area taxpayers have more to track this year than usual. This guide walks through everything you need to know — from the day the IRS started accepting returns to the moment your refund lands in your bank account — so you can file with confidence instead of guesswork. When the 2026 Tax Filing Season Officially Started The IRS opened the 2026 filing season on Monday, January 26, 2026, and began accepting and processing federal individual income tax returns for the 2025 tax year. The agency expects to process roughly 164 million individual returns this filing season, the vast majority filed electronically. If you qualified for a lower adjusted gross income, you may have been able to file even earlier. The IRS Free File program began accepting returns on January 9, 2026, for taxpayers with an adjusted gross income of $89,000 or less. Everyone else needed to wait for the official January 26 opening, though tax professionals like our team at Nova Tax & Accounting Services were able to prepare returns in advance so they were ready to transmit the moment the IRS systems opened. Key Federal Deadlines for the 2026 Filing Season Mark these dates on your calendar: January 15, 2026 — Fourth-quarter 2025 estimated tax payment due for self-employed individuals and anyone with income not subject to withholding. January 26, 2026 — IRS begins accepting and processing 2025 federal returns. February 2, 2026 — Deadline for employers to send W-2s and most 1099 forms (shifted from the usual January 31 because that date fell on a Saturday). April 15, 2026 — Federal filing and payment deadline for 2025 individual income tax returns (Form 1040). This is also the deadline for IRA and HSA contributions for the 2025 tax year. October 15, 2026 — Extended filing deadline for anyone who submitted Form 4868 by April 15. If you’re self-employed or run a single-member LLC, you also have ongoing quarterly estimated tax deadlines: April 15, June 16, and September 15, 2026, plus January 15, 2027 for the fourth quarter. One important note for anyone tempted to skip filing altogether: an extension only buys you more time to file, not more time to pay. Interest continues to accrue on any unpaid balance starting April 16, even if you have an approved extension. Virginia’s Filing Deadline Is Different — And That Matters Here’s something that trips up a surprising number of Virginia residents every year: Virginia’s individual income tax filing and payment deadline is May 1, 2026 — two weeks later than the federal deadline. Virginia Tax Commissioner Kristin Collins has reminded taxpayers to file electronically, since e-filed returns are typically processed within about four weeks, while paper returns can take ten weeks or longer. Virginia also grants an automatic six-month filing extension, pushing the extended deadline to November 1, 2026. But just like the federal extension, this is an extension to file — not to pay. Interest and, in some cases, penalties can still apply to unpaid Virginia tax liability after May 1. Virginia’s 2026 Tax Rebate: What You Need to Know The 2026 Virginia budget included a new Income Tax Rebate Fund, backed by roughly $499 million in general fund appropriations, aimed at putting money back into the pockets of working Virginians. Here’s how it works: The rebate applies to taxable years beginning on or after January 1, 2025, and before January 1, 2026. To qualify, you must file your Virginia return on or before November 3, 2026. The rebate amount is capped at your actual Virginia tax liability after deductions, subtractions, and credits are applied — so if your liability is lower than the rebate amount, you’ll only receive up to your liability. If you file before July 1, 2026, your rebate is expected to be issued on or before October 15, 2026. No interest is paid on the rebate regardless of when it’s issued. If you owe money to Virginia state agencies, your rebate may be reduced through the Setoff Debt Collection Act. This isn’t the first time Virginia has issued a rebate of this kind, but the mechanics change slightly each cycle, and missing the November 3 filing deadline means missing the rebate entirely — even if you eventually file later. If you haven’t filed your 2025 Virginia return yet, this is one more reason not to let it slide. Washington D.C.’s Tax Calendar: Similar, But Not Identical D.C. generally aligns its individual income tax deadline with the federal calendar, meaning D.C. returns are also due April 15, 2026 for most filers. If that date shifts due to a weekend or federal holiday in a given year, the D.C. deadline shifts with it. Where D.C. diverges sharply from federal rules is in how extensions work. D.C. does not accept the federal extension (Form 4868) as valid for D.C. purposes. If you need more time to file your District return, you must separately submit Form FR-127 and pay your estimated D.C. tax liability by April 15, 2026. Filing the federal extension alone does nothing for your D.C. filing obligation — a mistake we see trip up commuters and remote workers every single year. Filing FR-127 on time extends your D.C. deadline to October 15, 2026. D.C. taxpayers should also be aware of ongoing legislative friction between the D.C. Council and Congress over how certain federal tax provisions — including new exemptions for tips and overtime pay — are treated at the local level. The D.C. Council has, in some cases, chosen to continue taxing categories of income locally that now receive federal tax relief. This is a moving target, and it’s exactly the kind of nuance a local CPA firm can help you navigate, since generic
Tax season 2026 has been marked by significant changes at both the federal and state levels, with millions of taxpayers receiving refunds and new Virginia legislation providing additional tax relief. Whether you have already filed your 2025 tax return or are preparing to file, understanding the refund process, processing times, and new rebate programs can help you maximize your refund and avoid unnecessary delays. Federal Tax Refund Processing: A Successful 2026 Filing Season The 2026 federal tax filing season generally ran smoothly, with the IRS processing nearly 139 million individual tax returns and issuing more than 90 million refunds . The IRS successfully implemented extensive tax law changes despite significant operational challenges, including workforce reductions and leadership turnover . Key Statistics from the 2026 Filing Season According to National Taxpayer Advocate Erin M. Collins’s mid-year report to Congress, the filing season statistics demonstrate the scale of tax processing: Individual Returns Processed: 138.6 million Refunds Issued: 90.4 million Average Refund Amount: $3,275 Electronic Filing Rate: Approximately 98% Direct Deposit Rate: Approximately 98% By late March 2026, over 80% of refunds were issued in less than 21 days, with the average refund amount reaching $3,571 . Total refunds issued surpassed $202 billion, representing an increase of more than 10% compared to the previous year . New Tax Provisions Affecting Refunds The One Big Beautiful Bill (OBBBA) enacted in 2025 introduced several taxpayer-favorable changes that contributed to higher refund amounts in 2026 : No tax on tips No tax on overtime No tax on car loan interest A special tax deduction for seniors Permanent extension of several tax provisions that had been set to expire These provisions significantly benefited American families, with many taxpayers seeing higher refunds as a result . Refund Challenges: Delays and Service Issues While the filing season was largely successful, the National Taxpayer Advocate’s report identified several areas where taxpayers experienced challenges . Suspended Returns and Processing Delays More than 14 million individual income tax returns were suspended during processing for additional review . Over one million taxpayers did not receive their refunds within the IRS’s normal processing time, experiencing an average wait of about 5.5 weeks . The IRS encourages taxpayers who are expecting a refund to include banking information when they file. Taxpayers who did not provide valid bank information can use online tools on IRS.gov to provide the necessary information to get their refund faster . If a taxpayer receives a CP53E notice informing them that their banking information is missing or invalid, they can use their IRS Individual Online Account to resolve the issue quickly by providing accurate banking information. Once updated, the IRS will issue their refund, usually within seven days . Direct Deposit Requirement and Paper Check Delays In response to Executive Order 14247, the IRS began phasing out paper tax refund checks on September 30, 2025 . Most taxpayers must provide their routing and account numbers to receive refunds directly deposited into their bank accounts . However, limited exceptions exist for specific situations involving hardships, legal requirements, or procedural requirements . Taxpayers who qualify for an exception can provide this information through their IRS Individual Online Account, which will allow the release of a paper check within one to two weeks . Taxpayers should note: For security purposes, IRS employees cannot update bank account information over the phone or in person . Telephone Service Challenges Taxpayers had more difficulty reaching the IRS by phone during the 2026 filing season . Overall, the IRS received 48.1 million calls, telephone assistors answered only 9.9 million calls (21%), and the average wait time was 14 minutes . This compares unfavorably to the 2025 filing season, when 50.2 million calls were received, 12.4 million were answered (25%), and the average wait time was 8 minutes . The hardest-hit telephone lines included: Installment Agreement/Balance Due line: Only 31% of 3.4 million calls answered; average wait time: 45 minutes Taxpayer Protection Program line: Only 19% of 2.4 million calls answered; average wait time: 20 minutes Identity Theft Victim Assistance Delays The report notes continuing delays of approximately 20 months to resolve identity theft victim assistance cases . At the end of the filing season, more than half a million cases were pending in inventory . For many low- and middle-income taxpayers, waiting nearly two years for a refund is not merely an inconvenience but a significant financial hardship . Virginia Tax Refund: Deadlines, Processing, and New Rebates Virginia Filing Deadline: May 1, 2026 Virginia’s individual income tax filing and payment deadline is Friday, May 1, 2026 . Tax Commissioner Kristin Collins strongly encourages taxpayers to file electronically, as it is the faster, safer option . Electronically filed returns are typically processed within four weeks, while mailed returns may take up to ten weeks or longer . Virginia Automatic Filing Extension Virginia provides an automatic six-month filing extension to November 1 for most filers . No application is required. However, taxpayers must still pay any taxes owed by the original May 1 deadline to avoid penalties and interest . Virginia Refund Processing Timeline For taxpayers expecting a Virginia tax refund: Electronic filing with direct deposit: Typically processed within four weeks Paper returns: May take up to ten weeks or longer Returns flagged for review or manual processing: Additional delays may occur Taxpayers can track the status of their Virginia tax refund through the “Where’s My Refund?” tool on the Virginia Tax website or by calling 804.367.2486 . Virginia 2026 Income Tax Rebate The 2026 Virginia budget includes a significant tax rebate for individual taxpayers. The budget amendments establish the 2026 Income Tax Rebate Fund with $499,040,000 in general fund appropriations . Rebate Amounts Individual filers: Up to $100 Married couples filing jointly: Up to $200 Eligibility Requirements The rebate applies to taxable years beginning on and after January 1, 2025, but before January 1, 2026 . To receive the rebate, individuals must file their return on or before November 3, 2026 . The rebate is limited to the amount of the taxpayer’s liability after the application of any deductions, subtractions, or credits . The information statement attached to the rebate checks will state: “The enclosed Tax Relief for Working Virginians was authorized by the 2026 General Assembly” . Payment Timing For taxpayers filing a return before July 1, 2026, rebates will be issued on or before October