2026 Tax Law Changes for Self-Employed: What the OBBBA Means for You

The One Big Beautiful Bill Act (OBBBA) is the most significant tax legislation for self-employed people since the 2017 Tax Cuts and Jobs Act. It makes several expiring provisions permanent, raises reporting thresholds, and reinstates benefits that had been phasing out. If you file a Schedule C, these changes directly affect how much you owe and how much paperwork you deal with.

The good news: most of these changes are favorable for self-employed taxpayers. The key is understanding what shifted so you can take full advantage when you file your 2026 return (due April 15, 2027).

Let's break down each change, what it means in practice, and what you should do now to prepare.

1099-K Threshold: Back to $20,000 and 200 Transactions

If you've been confused about 1099-K reporting over the past few years, you're not alone. The American Rescue Plan Act of 2021 tried to lower the 1099-K reporting threshold to just $600. The IRS delayed that change repeatedly. Now, the OBBBA has settled it permanently.

What this means for you: If you earn less than $20,000 through payment apps, or have fewer than 200 transactions, you probably won't receive a 1099-K. That means less paperwork and fewer confusing forms to reconcile at tax time.

Important caveat: You still owe taxes on all business income, even if you don't receive a 1099-K. The reporting threshold only affects whether the payment platform sends you (and the IRS) a form. It does not change how much income you need to report on your Schedule C.

For a deeper dive into how 1099-K forms work with payment apps, see our guide to 1099-K and payment app taxes.

1099-NEC Threshold: Raised to $2,000

Since 2020, clients have been required to send you a 1099-NEC if they paid you $600 or more during the year. The OBBBA raises that threshold to $2,000, effective for payments made on or after January 1, 2026.

What this means for you: If you do small or one-off jobs for multiple clients, you may receive fewer 1099-NEC forms. A client who paid you $1,500 in 2026 is no longer required to file one.

The same caveat applies: Whether or not you get a 1099-NEC, you must report all business income. If a client paid you $1,000 and doesn't send a form, that income still goes on your Schedule C. Good record-keeping matters more than ever when you're receiving fewer forms to cross-reference.

QBI Deduction (Section 199A): Now Permanent

The Qualified Business Income (QBI) deduction is one of the most valuable tax benefits for self-employed people, and the OBBBA makes it permanent. Without this law, the deduction would have expired after 2025, potentially increasing your tax bill by thousands of dollars.

Who qualifies: Most self-employed people filing a Schedule C are eligible. If you're a freelancer, contractor, gig worker, or sole proprietor, you likely qualify. The deduction applies to sole proprietors, S-corp owners, and partners in pass-through entities.

Specified service businesses: If you work in fields like health, law, consulting, athletics, or financial services, the deduction phases out at higher income levels. The expanded phase-out range under the OBBBA gives you more headroom before those limits bite.

100% Bonus Depreciation: Permanently Reinstated

Under the original Tax Cuts and Jobs Act, 100% bonus depreciation was phasing down: 80% in 2023, 60% in 2024, 40% in 2025, and on track to disappear entirely. The OBBBA reverses that completely.

What this means in practice: If you buy a computer, camera, tools, furniture, vehicle, or any other qualifying business asset, you can deduct the full cost in the year you start using it for business. You don't have to spread the deduction over multiple years through regular depreciation.

If you're deciding whether to expense a purchase outright or depreciate it over time, our upcoming guide on supplies vs. equipment and depreciation covers how to categorize different types of business purchases.

2026 Standard Mileage Rate: 72.5 Cents Per Mile

The IRS has set the 2026 business standard mileage rate at 72.5 cents per mile, up from 70 cents in 2025. The increase reflects higher fuel, maintenance, and insurance costs.

For tips on tracking mileage effectively, see our self-employed mileage tracking guide.

Standard Deduction and Tax Brackets: Locked In

The OBBBA makes permanent the larger standard deduction and the seven-bracket tax structure from the 2017 Tax Cuts and Jobs Act. Without this law, the standard deduction would have dropped significantly and tax rates would have increased for most brackets in 2026.

For self-employed people, the standard deduction reduces your income tax but does not reduce your self-employment tax. Your Schedule C net profit is still subject to the 15.3% self-employment tax (Social Security and Medicare) regardless of which deduction you take.

No Tax on Tips (for Qualifying Self-Employed Workers)

The OBBBA introduces a new deduction for qualified tips, effective from 2025 through 2028. If you're self-employed in a tipped occupation listed by the IRS (such as food service, hairstyling, or rideshare driving), you may be able to deduct up to $25,000 in qualified tips from your taxable income.

If you earn tips through self-employment (for example, as a freelance hairstylist or delivery driver), check the IRS guidance to see if your occupation qualifies for this deduction.

Timeline: When These Changes Take Effect

Not every change kicks in on the same date. Here's a quick reference for when each provision applies:

What Self-Employed People Should Do Now

You don't need to wait until tax season to benefit from these changes. Here are concrete steps you can take right now: