Every few years, a piece of federal tax legislation comes along that touches nearly every line of the average tax return. The One, Big, Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is one of those laws. Several of its provisions phased in for the 2025 tax year, but a substantial number take full effect starting with the 2026 tax year — the return most taxpayers will file in early 2027, though some 2026-effective provisions are already shaping estimated tax planning happening right now. Here’s a comprehensive, plain-English breakdown of what changed, organized by who it affects most, with specific notes for Virginia and D.C. taxpayers. The Big Picture: What OBBBA Did The OBBBA permanently extended most of the individual income tax provisions from the 2017 Tax Cuts and Jobs Act that were otherwise set to expire at the end of 2025. Beyond simply preventing a tax increase, it also raised several deduction and credit amounts, changed how certain deductions are capped for high earners, and made a number of previously temporary business provisions permanent. The bill touches individual brackets, business deductions, estate planning, and reporting thresholds — which is why so many different types of taxpayers are affected differently. 2026 Individual Income Tax Brackets The OBBBA made the TCJA’s rate structure permanent, and the brackets are adjusted annually for inflation. For tax year 2026, the marginal rates and thresholds are: 37% for income over $640,600 (single) or $768,700 (married filing jointly) 35% for income over $256,225 (single) or $512,450 (married filing jointly) 32% for income over $201,775 (single) or $403,550 (married filing jointly) 24% for income over $105,700 (single) or $211,400 (married filing jointly) 22% for income over $50,400 (single) or $100,800 (married filing jointly) 12% for income over $12,400 (single) or $24,800 (married filing jointly) 10% for income up to $12,400 (single) or $24,800 (married filing jointly) Standard Deduction Increases For 2026, the standard deduction rises to: $32,200 for married couples filing jointly (up from $31,500 in 2025) $16,100 for single filers and married individuals filing separately (up from $15,750) $24,150 for heads of household (up from $23,625) For most middle-income taxpayers who don’t itemize, this increase alone reduces taxable income modestly year over year. A New Cap on Itemized Deductions for Top Earners Starting with the 2026 tax year, the OBBBA introduces a new limitation for taxpayers in the 37% bracket — single filers earning above $626,350 or married couples filing jointly above $751,600. Under this cap, itemized deductions for these top earners are limited to a tax benefit equivalent to 35 cents for every $1 deducted, rather than the full marginal rate. This is a meaningful planning consideration for high-income households in the DMV area, where a significant share of federal, legal, consulting, and executive-level income falls into or near this bracket. SALT Deduction Cap Raised The cap on the state and local tax (SALT) deduction — covering income, sales, and property taxes — was raised from $10,000 to $40,000, with this higher cap indexed and extended through 2029 in some reporting. This is one of the most consequential changes for Virginia and D.C. taxpayers specifically, given the region’s relatively high property values and state/local tax burden. Homeowners in Northern Virginia who were previously capped out at $10,000 in SALT deductions regardless of actual property and income tax paid may now be able to deduct significantly more, depending on income level and whether they itemize. Child Tax Credit Increase The Child Tax Credit increased from $2,000 to $2,200 per qualifying child for 2025, with the maximum amount now indexed to inflation starting in 2026. The credit begins to phase out at $200,000 MAGI for single filers and $400,000 for joint filers. New Senior Deduction Taxpayers age 65 and older can now claim an additional $6,000 deduction, available for tax years 2025 through 2028. This deduction phases out for taxpayers with MAGI over $75,000 (single) or $150,000 (married filing jointly). This is a temporary provision — worth factoring into retirement and Social Security tax planning conversations now, while it’s available, rather than assuming it will remain in place indefinitely. No Tax on Tips and Overtime Two new, temporary deductions apply to workers who receive tip income or overtime pay: Tips: A deduction of up to $25,000 per taxpayer, with phase-out beginning at $150,000 MAGI ($300,000 for joint filers) Overtime: A deduction of up to $12,500 per taxpayer, with the same phase-out thresholds These provisions matter significantly for the DMV’s substantial hospitality, restaurant, and service-industry workforce, though eligibility and calculation rules are more nuanced than the headlines suggest — not all “tip income” or “overtime pay” as commonly understood by employees maps cleanly onto the IRS’s technical definitions. Charitable Giving Changes Starting with the 2026 tax year, charitable giving rules changed in several ways: Non-itemizers can now deduct charitable cash contributions — up to $1,000 for single filers, $2,000 for joint filers — even without itemizing. This “above the line” style deduction had not existed in this form since the pandemic-era temporary provisions expired. The 60%-of-AGI cap on itemized cash donation deductions is now permanent, having previously been scheduled to revert to a lower limit. A new 0.5% “floor” applies to itemized charitable contribution deductions — meaning a small percentage of AGI must be exceeded before charitable deductions reduce taxable income, a new limitation that didn’t exist under prior law. A new federal tax credit for contributions to “scholarship granting organizations” was created, though it isn’t available until the 2027 tax year. Energy Credits Eliminated Several energy-related credits were eliminated starting with the 2026 tax year, including the Energy Efficient Home Improvement Credit, the Residential Clean Energy Credit, and the Alternative Fuel Vehicle Refueling Property Credit (terminated for property placed in service after June 30, 2026). Homeowners in Virginia and D.C. who were planning energy efficiency upgrades, solar installations, or EV charging infrastructure with these credits in mind should revisit their timeline, since these incentives are no longer available under current law. 1099 Reporting
Tax-exempt status is not the same thing as filing-exempt status. It’s one of the most common misconceptions nonprofit leaders bring to their first meeting with our firm, and it’s an expensive one to hold onto — because missing a Form 990 filing doesn’t just mean a late fee. It can mean losing your organization’s tax-exempt status entirely. This guide walks Virginia and D.C. nonprofit leaders through exactly what’s required for the 2026 filing year, which form applies to your organization, and how to avoid the mistakes that most often trigger IRS scrutiny. Why Nonprofits Still Have to File — Every Year Most tax-exempt organizations recognized under Section 501(c)(3) or a related exemption category must file an annual information return with the IRS regardless of how much revenue they bring in. The purpose isn’t just tax accounting — Form 990 is a public disclosure document. Donors, watchdog organizations like GuideStar and Candid, prospective funders, and journalists can and do read it. A sloppy or late 990 doesn’t just risk IRS penalties; it can quietly damage the trust your organization has spent years building. When Is Form 990 Due in 2026? Form 990 is due on the 15th day of the 5th month following the end of your organization’s accounting period. For organizations on a standard calendar tax year (January 1 – December 31), that means Form 990 is due May 15, 2026 for the 2025 tax year. If your organization operates on a different fiscal year — say, a school or arts organization with a July-to-June fiscal year — your due date shifts accordingly. For example, organizations with a fiscal year ending March 31, 2026 have a Form 990 due date of August 17, 2026. If the 15th falls on a weekend or federal holiday, the deadline moves to the next business day — which is exactly what happens in November 2026, since November 15 falls on a Sunday, pushing certain extended deadlines to November 16 or 17 depending on the specific due date rule applied. Extensions Organizations that can’t meet the original deadline can file Form 8868 for an automatic six-month extension. For calendar-year organizations, filing Form 8868 by May 15, 2026 extends your Form 990 deadline to November 16, 2026. Unlike some IRS extensions, this one is genuinely automatic — you don’t need to explain why you need more time, but you do need to file it before the original deadline passes. There’s no way to request an extension after the original due date has already come and gone. Which Form 990 Variant Does Your Organization File? Not every nonprofit files the same version of Form 990. The correct form depends on your organization’s gross receipts and total assets: Form 990-N (e-Postcard): For organizations with gross receipts normally $50,000 or less. This is a brief electronic filing with basic organizational information. There’s technically no penalty for filing this one late, but missing it for three consecutive years still triggers automatic revocation of tax-exempt status. Form 990-EZ: For organizations with gross receipts under $200,000 and total assets under $500,000. This is a shorter version of the full return. Form 990 (long form): Required for organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more at year-end. This is the full 12-core-page return plus applicable schedules, and it’s the version most mid-size and larger nonprofits will file. Form 990-PF: Required for private foundations regardless of financial size. Form 990-T: An additional filing required if your organization has unrelated business income (UBI) — income generated from activities outside your primary tax-exempt purpose. Larger nonprofits budget significant time for the full Form 990 — often 40 to 60 hours of preparation depending on organizational complexity, since it requires detailed financial data, program descriptions, governance disclosures, and compensation information for officers, directors, and key employees. The Three-Year Rule: A Deadline You Cannot Afford to Miss This is the single most consequential compliance rule in nonprofit tax filing: if your organization fails to file its required Form 990 for three consecutive years, its tax-exempt status is automatically revoked — no warning letter, no grace period, no case-by-case review. The IRS does not reverse this revocation quietly or easily. Reinstatement typically requires filing a new exemption application and, in many cases, paying the associated fee again, along with demonstrating reasonable cause for the lapse. If your nonprofit has any uncertainty about whether recent filings were completed — a leadership transition, a change in bookkeeping staff, or a gap during a slow period — it’s worth confirming your filing history directly with the IRS or a CPA before assuming everything is in order. Late Filing Penalties Penalties for filing Form 990 late or incompletely can add up quickly. The IRS imposes penalties starting at $20 per day for smaller organizations (those with gross income under a specified threshold), and penalties can, in certain circumstances, be assessed against responsible individuals personally — a detail that has caught board members off guard when they assumed filing was “someone else’s job.” Electronic filing systems generally have a cutoff time of 5:00 PM Eastern, so don’t count on a midnight deadline the way you might with some other filings. Political Activity: A Growing Area of Scrutiny Section 501(c)(3) organizations are absolutely prohibited from participating in political campaigns and are limited in permissible lobbying activity. Form 990 asks direct questions about political and lobbying activity, and answering these questions incorrectly — even unintentionally — can trigger an IRS examination or jeopardize exempt status. Given the heightened scrutiny nonprofit political activity has received in recent years, this section of the form deserves careful, deliberate review rather than a quick check-the-box approach, especially for organizations engaged in advocacy or issue-based programming. Nonprofit Compliance Beyond Form 990 Federal filing is only one piece of nonprofit compliance. Organizations operating in Virginia and D.C. should also be aware of: Independent financial audits and reviews. Many funders, state charitable solicitation registrations, and internal governance policies require an independent audit, review, or compilation
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