Employers offering their workers paid family leave in 2026 will generally be able to claim a business tax credit. Following changes by the One Big Beautiful Bill Act, your organization can calculate the credit based on 12.5% to 25% of actual wages paid to employees on leave for up to 12 weeks or of what you pay for a qualifying insurance policy.
The premiums-paid method may appeal to employers that aren't self-insuring or that have fewer employees. Note that if your state or local government mandates different leave policies, these laws affect the amount of paid leave required but not the calculation of the federal tax credit. Contact your tax advisor for details.
In general, companies can deduct rent as a business expense on their federal tax return. However, several rules limit this tax break. For example, payments made under a conditional sales contract aren't deductible as rent. And you can't deduct "unreasonable" rent. This means it's higher than market value, such as inflated rent paid to a "related person."
If you pay in advance, you can only deduct rent that applies to your use of the property during the tax year. (You'll be able to deduct the rest in the year to which the payment applies.) On the other hand, you can usually deduct expenses you've paid to cancel a business lease. For help identifying deductible expenses, contact your tax professional.
Closing a business can be overwhelming. But don't let tax duties fall through the cracks. File a federal income tax return for your business's final year and, if you have employees, make final federal tax deposits and report employment taxes. If you engaged independent contractors and in your final year paid anyone $600 or more ($2,000 for 2026, indexed for inflation after that), report the payments.
Also, cancel your employer identification number (EIN) by sending the IRS a letter with the EIN, business name and address, and reason for closing your account. Finally, retain records of your business's tax returns, employment tax payments and any property it owned. Contact your tax advisor for help.
Big news for agriculture innovators: On Feb. 3, the U.S. Tax Court ruled in George v. Commissioner that research to improve poultry health, disease resistance and growth rates qualifies for the research and development (R&D) tax credit under Section 41 of the Internal Revenue Code. This marks the first time animal agriculture has been formally recognized as eligible for R&D credits.
In general, agribusinesses can qualify for these credits by increasing research to develop new ways to boost crop yields or improve animal performance. The decision affirms that eligible agribusinesses are entitled to claim the R&D credit, on par with other innovation-driven industries.
Employer reimbursements for bicycle commuting costs, such as purchases, repairs and storage, remain taxable income to employees. That's because the suspension of the $20-per-month tax-free benefit was made permanent by the One Big Beautiful Bill Act in 2025.
Although this exclusion is gone, qualified transportation fringe benefits such as parking, mass transit passes and van pooling are still tax-free to employees (up to $340 per month for 2026). However, these benefits generally aren't deductible by employers.
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