Editor’s Note
As businesses move into 2026, tax planning feels more stable than it has in years. The One Big Beautiful Bill Act (OBBBA) extended or made permanent several provisions that had been hanging over long-term decisions, which helped move many organizations past the “wait and see” mindset that shaped planning for much of the last decade.
That added clarity helps, but it does not remove complexity. Capital investment, labor costs, and cash flow decisions are still being made in a higher interest rate environment, and global factors continue to shape risk. This outlook focuses on how businesses are adjusting now within the broader 2026 economic and tax outlook, rather than predicting what may come next.
The 2026 Economic Picture
By 2026, the economy has lost some of the volatility of the last few years, but it hasn’t become easy to navigate. Inflation is no longer accelerating, and the Federal Reserve has started cutting its effective rate, yet interest rates still remain high enough to influence everyday decisions around borrowing, hiring, and timing investments. Some experts suggest that the Federal Reserve seems to have settled for a 3% year-on-year inflation rate, rather than its historical target of 2%. Debates within the Fed’s Open Market Committee have increased in volume and vigor inflation hawks argue against rate cuts, doves argue for the cuts, and neither side is a clear winner. But costs are no longer simply about charting interest rates within the Fed, as tariffs introduced in 2025 continue into the new year and provide a degree of trade uncertainty the country has not seen in more than 50 years. For many businesses, moving forward now means double-checking assumptions rather than charging ahead.
Tax policy has become more predictable, which helps. January 1, 2026, was set to be a day of true trepidation for individuals and closely-held businesses as federal taxes were expected to spike on New Year’s Day. To the relief of many, the tax bill passed over the summer prevented this spike and largely stabilized the tax laws. With fewer potential changes hanging over the tax code, organizations can make decisions about compensation, capital spending, and structure with less guesswork. That said, predictability doesn’t remove risk. Trade policy, regulation, and global events still show up in planning conversations, even when they’re outside a company’s control.
In 2026, growth doesn’t follow a single playbook. Some organizations are expanding carefully, others are holding steady, and many are focused on protecting what they’ve built. Expansion of certain tax benefits, the presence of protective tariffs, and the broadening of AI in the market all coalesce to indicate that 2026 may be a year of increased start-up ventures and a potential expansion of private equity investment. Flexibility and realism tend to matter more than speed.
Tax Planning After OBBBA
OBBBA tax planning in 2026 looks very different than it did just a few years ago. Instead of racing against expiration dates, many organizations now have clearer rules to work with. That shift makes planning more practical, even though the tax code itself remains complex and highly situational.
From Expiration Anxiety to Planning Clarity
For years, tax strategy was driven by what might go away. OBBBA reduced much of that uncertainty by extending or making permanent several provisions that had been scheduled to expire under TCJA. As a result, businesses can spend less time reacting to potential changes and more time focusing on how to use the current rules.
Income Tax Planning Is Easier to Model
Income tax rates feel less like a moving target than they did a few years ago. That makes it easier for owners and leadership teams to model compensation, distributions, and cash needs without constantly revisiting assumptions.
Capital Investment Comes with More Tradeoffs
OBBBA restored and extended incentives that support capital investment, including greatly expanded depreciation-related provisions. In practice, tax benefits are only one part of the decision. Higher interest rates, financing costs, and uncertainty around demand are forcing many businesses to slow down and take a harder look before committing capital.
R&D Decisions Still Affect Cash Flow
For companies that rely on research and development (R&D), timing continues to matter. Even with improved policy clarity, spreading deductions over time can strain cash flow, particularly for growing or capital-constrained organizations.
Pass-Through and Estate Planning Still Matter
Pass-through income and the QBI deduction remain viable and relevant for closely held businesses, but many owners are revisiting structures to be sure they still fit current conditions. Estate planning also feels less urgent than it once did, though strategies still need periodic review as valuation planning, family dynamics, and long-term goals change.
Costs, Capital, and Growth Decisions
Labor remains one of the most difficult pressures to manage. Wages and benefits are still high, and competition for skilled talent has not eased as much as many expected. Rather than adding headcount, many organizations are adjusting roles, redistributing work, looking for efficiency within existing teams, and turning to business advisory support to help evaluate investments and manage risk in a higher-rate environment.
Growth is also being handled more cautiously. In 2026, expansion is less about momentum and more about whether new investments clearly support long-term goals. Projects with unclear returns are easier to pause or postpone than they were a few years ago.
Inflation, Interest Rates, and Financial Reality
Inflation may have cooled, but everyday costs remain elevated far above their pre-pandemic levels. Higher interest rates continue to influence borrowing, deal activity, and cash flow planning. Even as inflation cools off and interest rates normalize, it is unlikely that prices will drop back down to their historical trend levels, and the economy would have a new set of problems if they did. For now, prices seem elevated but more stable, and most market participants are simply waiting for the economy to catch up with the elevated prices so everything can feel more normal again. Only time can truly heal the high price wound.
Many teams are planning around these current conditions of high prices, elevated rates, and tariffs. Good plans often mean holding more liquidity than previously and leaving room to adjust if borrowing costs or demand shift again.
Trade, Tariffs, and Supply Chains
Trade and supply chain issues remain part of normal decision-making in 2026. Even with more certainty on the tax side, global trade dynamics are still difficult to predict.
While pandemic-related disruptions to supply lines have completely disappeared in the past couple of years, Tariffs may have taken their place as they influence costs for manufacturers, distributors, and technology companies. Tariff rates vary country-by-country and have shifted substantially since they were first introduced in the Spring of 2025. But even when tariff rates appear stable, the possibility of change affects pricing, sourcing, and long-term contracts. Add to the mix a newly emerging gunboat diplomacy from the American administration, and the world economy feels a bit more like the first decade of the 20th century than the first decade of the 21st century. Many organizations are still reworking supply chains to reduce global economic and political risk through nearshoring, reshoring, or supplier diversification.
Global risk hasn’t gone away; it has just changed shape. Currency swings, regulatory changes, and geopolitical events continue to influence pricing and operations, even when companies have little control over the outcome.
Industry Outlooks for 2026
How these pressures show up depends heavily on the industry and how exposed a business is to labor costs, financing, and supply chain risk.
Healthcare
- Reimbursement and physician compensation remain difficult to balance.
- Staffing shortages and wage growth continue to pressure margins.
- MSO activity continues, driven by consolidation and private equity interest.
- Many providers are focused on financial performance and long-term viability.
- Continued viability of the Affordable Care Act may depend on the outcome of the 2026 midterm elections.
Manufacturing & Distribution
- Tariffs, materials pricing, and supply chain complexity continue to drive volatility.
- Higher financing costs are causing some companies to slow or phase out investments.
- Supply chain redesign remains active, particularly for risk reduction.
- Mergers and Acquisitions in this space may get a boon from recent tax law changes.
Real Estate & Construction
- Higher interest rates continue to weigh on transactions and development.
- Everyone is waiting for mortgage rates to come down, but it is unclear where they will settle.
- Financing and construction costs remain elevated.
- Developers are placing more emphasis on long-term demand and stable returns.
Technology & SaaS
- Funding is more disciplined, with greater focus on profitability.
- Capital costs and development spending continue to affect cash flow.
- Growth is being balanced against tighter spending controls.
What Businesses Should Prioritize in 2026
Effective OBBBA tax planning now depends less on timing expirations and more on aligning tax strategy with capital, cash flow, and growth decisions.
With fewer tax unknowns heading into 2026, businesses have more room to be intentional:
- Revisit tax strategies now that key provisions are no longer set to expire.
- Take an early look at liquidity and debt rather than waiting for pressure points, a theme many executives are already prioritizing.
- Build plans that allow for adjustment instead of locking in assumptions too early.
Outlook for 2026–2027
Taken together, these trends shape the broader 2026 economic and tax outlook, where execution and flexibility tend to matter more than headline policy changes.
Looking ahead, the focus is less on new rules and more on follow-through. OBBBA removed much of the uncertainty around the tax code, but it did not make the economic environment predictable.
The organizations that tend to hold up best are the ones that check assumptions often, avoid overcommitting too early, and make room to change course when conditions shift. LBMC will continue to track legislative, regulatory, and economic developments and share insights as the landscape evolves.