Filing Your Business Income Tax Return: What To Know for 2026

You’re not imagining it — filing business taxes feels more complicated every year. In 2026, small businesses face more than routine paperwork as key provisions of the Tax Cuts and Jobs Act (TCJA) begin to expire. But tax season doesn’t have to mean panic or penalties. Business tax returns include federal income tax returns, state returns, and local returns for businesses and owners. When you start early, you can reduce stress and potentially find strategic tax savings opportunities before you file.

This guide covers what’s due when, what filing method makes sense for your business, and how to sidestep the most common mistakes. We'll also look ahead to what may change for the 2026 tax year.

What Taxes Are Due for 2025?

For most businesses operating on a calendar year, returns filed in 2026 report income and deductions from January 1 through December 31, 2025. The legal structure of your business — it’s “entity type” — determines who pays the taxes and how they're calculated for business tax filing in 2026:

• Pass-Through Entities: Partnerships, S corporations, and most LLCs don't pay federal income tax themselves. Instead, profits flow through to owners' personal returns.
• C Corporations: Corporation profits are taxed at the entity level, which means your business pays corporate income tax.

Each structure also follows its own filing schedule, and knowing which timeline applies to you helps you stay out of trouble.

When Are Business Income Tax Returns Due for 2025?

Small business tax deadlines vary by entity type, and missing one can be expensive. Late-filing penalties aren’t tax deductible and increase the longer your return is overdue. For 2025 tax-year returns filed in 2026, here are dates to mark on your calendar:

• Partnerships and S corporations operating on a calendar year (which most do) must file by March 16, 2026.
• C corporations must file by April 15, 2026.
• Limited liability companies (LLCs) with multiple members file partnership returns, and single-member LLCs file their returns with the owner's tax return unless they elect to be taxed as corporations.
• Sole proprietorships file their business return with the owner's tax return.
• Business owners must file their personal 2025 income tax returns by April 15, 2026.

Check your state’s requirements for filing business tax returns. Many states have the same due dates as the ones for federal income tax purposes. Businesses with operations in multiple states may have additional dates to manage. Hiring remote workers or doing business — even just online — in other states can give your business enough of a presence that you’ll owe taxes there (more on that later).

Can't Meet the 2026 Deadline? File an Extension for Business Taxes

If, for any reason, you can’t file on time, you can request an automatic six-month extension — but an extension to file is not an extension to pay. It's advisable to pay as much as you expect to owe to minimize or avoid late-payment penalties.

You must submit the extension request no later than the filing deadline. Entities use IRS Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request an extension. Individuals (including sole proprietors, self-employed individuals, and one-member LLCs) use IRS Form 4868.

Additionally, the IRS may automatically extend your federal filing timeline for your business tax return and your personal income tax return if you are located in a federal disaster area. There is an automatic 60-day extension for disaster victims, but the IRS may grant even more time — up to one year — to file.

How To File Taxes for a Business

Most businesses e-file their tax returns. According to the 2024 IRS Data Book, 94% of S corporations and nearly 95% of partnerships e-filed their returns during the government's 2024 fiscal year ending September 30, 2024. Three excellent reasons explain why:

• E-filing processes your return fastest and closes out the year quickly.
• Business owners who report their share of business income on their personal return and expect a tax refund will receive it more quickly when they e-file (even faster when they request direct deposit).
• All businesses and tax return preparers who file more than 10 information returns in the 2026 filing season must e-file, with limited exceptions.

Choose Your Tax Preparation Method

Decide who will prepare and file the returns as soon as possible. You have options: Hire a CPA or other tax professional, handle everything in-house, or use tax preparation software for both business and personal filings.

The right approach depends on your business, how much time you have, and how comfortable you are with tax rules. Tax software might work for straightforward single-state operations, but multistate employees, entity changes, or complex deductions often require professional help.

Many owners rely on a CPA or tax preparer to keep submissions accurate and on schedule. If you don’t have one yet, now’s the time to find one and get your appointment on the calendar. When hiring, verify credentials (CPA, EA), ask about their SMB experience, and clarify whether you need help filing business tax returns or year-round tax planning.

Consider the Impact of Out-of-State Workers

According to the U.S. Census Bureau, 13.8% of U.S. workers usually worked from home in 2023, more than double the percentage reported in 2019. While out-of-state remote workers don’t affect federal income taxes, it complicates state and local income tax requirements. Businesses usually file their state income tax returns according to "nexus," meaning where they have a business connection. A company typically establishes a nexus where it has a physical location.

However, employing workers in another state can also create a nexus, which may require the business to file income tax returns and pay state and local taxes in that state.

Your payroll system already tracks where employees work — use this data to identify potential reporting obligations.

Gather Your Tax Records

Your tax return relies on accurate records of your business income and expenses for the year. Keep these records accessible — whether you use a desktop system or cloud-based accounting software — so you and your tax preparer can complete the return efficiently. Make sure your accounting system clearly tracks payroll information, including wages, compensation, and employment taxes, since all of these factor into your return.

In addition to annual income and expenses data, be sure to have various records and other small business tax information on hand to help with return preparation:

• Prior Year Returns: Review past returns for carryovers such as net operating losses, general business credits, or capital losses that can reduce your current tax bill. If you don’t have copies, request them from the IRS.
• Owner Investment Information: Partnerships and S corporations must track each owner’s basis (their total investment in the business) to determine how much loss they can deduct. Report this using Form 7203 or the relevant K-1 schedules.
• Asset Information: Businesses other than sole proprietorships must report total assets on their tax return. When you sell an asset, calculate gain or loss using its basis – what you paid, minus depreciation, plus improvements.

Have Supplemental Tax Information Ready

Keep receipts, invoices, canceled checks, and other documents to support your business deductions and credits. You don’t need to submit this supplemental information with your return, but you must retain it and keep it accessible in case of an audit.

In addition to receipts or other paperwork that proves expense amounts, tax law requires extra documentation in some situations:

• Travel, Meals, Vehicles, and Business Gifts: Keep detailed records, as receipts alone aren’t sufficient to back up deductions for these expenses. IRS Publication 463 explains the specific record-keeping requirements.
• Charitable Giving: Get written acknowledgment from the organization for any business donation of $250 or more. IRS Publication 526 outlines the full substantiation rules for charitable contributions.

Consider Post-Year-End Tax Saving Strategies

Even after the calendar ends, you still have opportunities to claim tax deductions. These involve taking specific actions and making certain elections on tax returns. Here are some examples:

• Maximize Retirement Plan Contributions: You can make tax-deductible contributions to qualified retirement plans up to the extended due date of your return. If your business doesn’t have a plan yet, you can still set one up and fund it before that date. See IRS Publication 560 for details.
• Decide How To Write Off Equipment Costs: If your business purchased equipment or machinery in 2025, you can choose how to deduct the expense — through Section 179, bonus depreciation, regular depreciation, or a de minimis safe harbor election. Make this decision when you file your return, as it can affect future taxes. More information about these options is in IRS Publication 946.
• Check for Research Credit Refunds: Businesses that conducted research in 2025 may qualify for a refundable research credit. The credit is part of the general business credit and allows a one-year carryback. Use Form 6765 to claim it and include all required documentation.
• Plan Around Tax Law Changes: While the TCJA is set to expire at the end of 2025, the 20% qualified business income (QBI) deduction for pass-through owners continues under the new tax law passed in July, also known as the One Big Beautiful Bill Act. Corporate rules mostly stay the same, but bonus depreciation keeps phasing down and will disappear completely for business tax filing in 2026.

When Are Business Taxes Due in 2026?

In addition to maximizing deductions, stay on top of small business tax deadlines for filing and payments throughout the year. Keep these dates in mind as you meet your 2025 tax obligations and plan ahead for 2026 tax savings.

Business Tax Changes To Be Mindful of When Filing in 2026

Whether you're an experienced business owner or just starting out, tax laws evolve constantly. The changes for 2026 are more significant than most years due to major legislation — like the TCJA sunset provisions and the 2025 tax law — that affects everything from deductions to reporting requirements. Understanding these changes early gives you time to adjust your planning and protect your cash flow.

Before taking any action, speak to your CPA, business tax professional, or legal adviser to determine the best course of action for your business.

What's New on Returns Filed in 2026

The 2025 tax year brings substantial changes to business taxation. The 2025 tax law has permanently resolved uncertainty around provisions that were set to expire while introducing new benefits and requirements that affect businesses. Here’s what to know:

• Tax Rate Structure: The same seven-bracket system remains in place, with rates ranging from 10% to 37%. That’s especially important for pass-through entity owners who pay business taxes on their personal returns.
• QBI Deduction: The 20% qualified business income (QBI) deduction is now permanent with a new $400 minimum deduction for taxpayers with at least $1,000 of QBI.
• Business Interest Limitation Deduction: Businesses can now add back depreciation, amortization, and depletion when calculating adjusted taxable income for Section 163(j). This lets businesses who spend a lot on equipment and assets deduct more interest.
• Section 179 Expensing Limits: Businesses can deduct up to $1.25 million (increasing to $2.56 million for tax year 2026) of qualifying purchases right away. The deduction starts to phase out once total equipment spending goes over $3.13 million ($4.09 million in 2026), and the limit for certain SUVs is $31,300 (increasing to $32,000 in 2026).

Adjustments for Inflation

The IRS adjusts dozens of tax items each year to account for inflation. For example, tax brackets have been adjusted for individuals, impacting what owners of pass-through entities pay on their share of business income. Some other items affecting businesses due to cost of living adjustments (COLAs) include:

• Standard Mileage Rate for Business Driving: If actual expenses aren't deducted, then the IRS-set rate is $0.70 per mile for 2025.
• Small Business Health Insurance: Eligibility is partly based on wages; the amount has been adjusted for inflation for 2025.
• Gross Receipts Test: This test determines whether a business can use the cash method of accounting, forego doing inventory accounting, and for specific other purposes. The gross receipts test in 2025 is $31 million in average annual gross receipts in the three prior years.
• Section 179 Deduction (First-Year Expensing): Instead of depreciating the cost of machinery, equipment, and other eligible property placed in service before the end of 2025 over several years, businesses can deduct an immediate up to the 2025 limit ($1.25 million, reduced dollar for dollar for purchases in excess of $3.13 million).
• Retirement Plan Contributions: The limits have increased for 2025 contributions to qualified retirement plans.
• Limitation on Losses for Noncorporate Taxpayers: The limitation that caps losses for the current year has increased; excess losses become part of a net operating loss that can be used in future years.
• Certain Commercial Buildings: The energy-efficient commercial buildings deduction limits have increased for 2025.

Other Reminders

When filing the 2025 tax return, remember these tax rules:

• E-Filing Requirements: Many businesses must e-file their returns. All businesses should consider electronic submission, especially when expecting a refund — the National Taxpayer Advocate said, "Paper is the IRS's Kryptonite."
• Clean Vehicle Tax Credits Terminated: The New Clean Vehicle Credit, Used Clean Vehicle Credit, and Qualified Commercial Clean Vehicle Credit all terminate after September 30, 2025.
• Form 1099 Reporting Threshold Increased: Starting in 2026, businesses won’t need to file forms 1099-MISC or 1099-NEC unless payments total at least $2,000. The threshold will increase each year to keep up with inflation.
• Estimated Taxes for 2025: The first installment of estimated taxes for individuals and calendar-year corporations is due on the same day as 2025 income tax returns are filed. Obtaining an extension for filing the 2025 return does not give you more time to pay estimated taxes for 2026. Payment of taxes due for 2025 and estimated taxes for 2026 must be made separately. Check with your business tax professional about new tax rules affecting 2026 taxes.

Key Tax Planning Strategies for 2025/2026

Smart tax planning isn’t just about filing on time — it’s about managing your business finances all year long. By starting sooner and doing some prep work, you can make filing business taxes for your business more efficient and less stressful.

Consider these areas to strengthen your year-round tax approach:

• Plan Income and Expenses: Talk with your CPA about whether it makes sense to push income into next year or pull deductions into this one.
• Track Credits Early: From R&D to energy efficiency and employee training, knowing which credits apply can reduce what you owe, dollar for dollar.
• Stay Organized With Payroll and Benefits: Align your payroll tax deposits, benefits contributions, and estimated payments to avoid penalties and surprises.

Tax complexity grows right alongside your business. Working with experienced business tax professionals — and using integrated payroll and tax services like Paychex — helps you stay compliant, identify savings you might otherwise miss, and walk into tax season feeling confident instead of overwhelmed.

Common Business Tax Mistakes To Avoid

The most expensive tax mistakes are often preventable. The right approach can help businesses avoid costly problems down the road.

• Quarterly estimated taxes are one area that can catch many business owners off guard, especially when revenue is up. The IRS expects you to pay taxes as you earn income, and underpayment triggers penalties plus interest. Review your actual income and expenses with your accountant each quarter rather than relying on last year's estimates.

• Mixing personal and business expenses can also create red flags. The best practice is often to open dedicated business accounts and use accounting software that automatically imports transactions. You can then photograph and attach receipts immediately after purchases. Remember that missing tax payment deadlines can trigger immediate penalties. Building a tax calendar helps you know when business taxes are due.
• Employee misclassification creates serious exposure. The IRS uses specific tests to determine proper classification, and getting it wrong means owing back payroll taxes and penalties. When in doubt, consult your tax professional about proper worker classification and documentation.

Entity-Specific Filing Requirements and Thresholds

Requirements for filing business taxes vary dramatically depending on how your business is structured. Understanding your specific obligations can prevent costly compliance failures. Like a lot of other nuances in taxes, it can depend on your business entity type.

• C Corporations: File annually using Form 1120 regardless of income or activity, even if the corporation had no income for the year. Any corporation expecting to owe $500 or more in taxes needs to make quarterly estimated payments.
• S Corporations: File annually using Form 1120-S, but income flows through to shareholders' personal returns.
• Partnerships and Multimember LLCs: File Form 1065 annually regardless of income. There's no threshold — if the partnership exists, it files. Partners receive Schedule K-1s showing their share of income or loss.
• Single-Member LLCs: The IRS considers these disregarded entities by default, meaning the owner reports business income on Schedule C of their personal return, just like a sole proprietor. However, single-member LLCs can elect S Corporation or C Corporation status, which changes business filing requirements.
• Sole Proprietors: File Schedule C when net earnings exceed $400, which triggers self-employment tax. Below that threshold, there’s generally no need to file unless you have other income requiring a return.