08/25/2026
Tax Practice Brief โ August 25, 2026
1. 2026 Form 1099 threshold increases to $2,000
Who is affected: Businesses paying independent contractors and making certain other reportable business payments.
The IRSโs new business-tax explainer confirms that, for payments made during 2026, the general Form 1099-NEC threshold and certain Form 1099-MISC thresholds increase from $600 to $2,000. Inflation adjustments begin after 2026.
Practice action: Update bookkeeping and year-end information-return workflows, but continue collecting Forms W-9 before making payments. Retain complete vendor-payment records because payment type and special reporting rules still matter.
Client talking point: โNot receiving a Form 1099 does not make income tax-free. Self-employed taxpayers must still report all taxable business income.โ IRS business-provisions explainerโ ๏ฟผ
2. Employer-provided meals lose deductions in 2026
Who is affected: Employers providing free or subsidized meals, coffee, snacks or similar de minimis food benefits to employees.
Beginning with 2026 tax years, most employers may no longer deduct meals excluded from employeesโ income or treated as de minimis fringe benefits. Exceptions remain for certain customer sales, commercial vessels, offshore rigs and support camps.
Practice action: Create separate bookkeeping categories for customer food costs, employee meals and workplace snacks. Do not automatically classify all food expenses as 50% deductible.
Client talking point: โFree employee meals and office snacks may still be tax-free to workers, but that does not mean the employer can deduct the cost.โ
3. New charitable-contribution floor for C corporations
Who is affected: C corporationsโincluding LLCs that elected C-corporation taxationโmaking charitable contributions during 2026.
For tax years beginning after December 31, 2025, the corporate charitable deduction generally applies only above a new 1% taxable-income floor and remains subject to the 10% ceiling. Five-year carryforward rules may apply, but contributions disallowed by the floor require special review.
Practice action: Model charitable gifts before year-end rather than assuming every contribution will produce a current deduction. This is especially important when advising new C-corporation clients.
Client talking point: โA charitable gift by your corporation may not create a dollar-for-dollar current deduction because the new 1% floor applies beginning in 2026.โ
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1. Tax review advised: โBusiness owners: The general Form 1099-NEC reporting threshold increases from $600 to $2,000 for payments made in 2026. Keep collecting W-9s and tracking every vendor paymentโincome remains taxable even when no 1099 is issued.โ
2. Tax review advised: โC corporations now face a 1% taxable-income floor on charitable deductions. Before making a large corporate donation, confirm how much will actually be deductible for 2026.โ
3. โEmployers: Office snacks and employee meals may no longer be deductible beginning in 2026, even when employees do not have to include the benefit in their income.โ
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