Texas is a great place to run a business, but the tax rules can look a little different from what you see in other states. There is no personal income tax, but there are other state-level rules and federal deductions that affect how much you keep. Whether you run a busy trade business, a small real estate team, or a solo service practice, understanding your deductions early helps you avoid surprises later.
With the One Big Beautiful Bill Act (OBBBA) updating several federal tax provisions, 2026 brings new planning opportunities for Texas business owners. At Adam Traywick, CPA, we help you make sense of the rules so you can approach tax season with confidence.
Here are eight Texas business tax deductions and breaks to plan for now so you can step into 2026 with confidence.
The Qualified Business Income (QBI) deduction remains one of the biggest tax opportunities for owners of pass-through entities. The OBBBA strengthened this deduction, removed the old 2025 sunset date, and adjusted several income thresholds so more small business owners continue to qualify.
This matters for trades, real estate agents, insurance professionals, and other service-based businesses whose earnings may be rising. The updated rules make the deduction more predictable, but your entity structure and owner compensation still affect how much you can claim.
If you have not reviewed your setup in a while, now is a good time to check whether staying a sole proprietor, remaining an LLC, or switching to an S corporation gives you the best result. For more guidance, you can read our post: S Corp vs LLC in Texas: Which Structure Is Better for Taxes?
The enhanced Research and Development credit is no longer limited to technology companies. Many Texas businesses qualify without realizing it. You may be eligible if you are improving internal processes, testing new materials, developing product variations, increasing energy efficiency, or building custom systems.
This is common for HVAC companies testing new installation methods, manufacturers improving workflows, software teams building internal tools, and trades experimenting with better service processes.
The OBBBA kept the expanded R&D credit rules in place, including the option for qualifying small businesses to use the credit against payroll taxes. That means you can benefit even if you do not owe income tax. If your business has been growing or adding new services, it may be time to revisit this credit.
Texas allows businesses to exempt a portion of their business personal property from taxation if the total value falls within local thresholds. Many counties have increased their exemption limits, which makes this a valuable opportunity for smaller trades businesses, real estate teams, and insurance agencies.
Business owners often forget to file the required paperwork. As a result, they pay property taxes they did not owe. If you keep equipment, office furniture, tools, laptops, or supplies for your business, it is worth gathering your inventory list early. Filing the exemption correctly can reduce your property tax bill significantly.
Texas does not have a personal income tax, but it does have a state tax on businesses called the franchise tax. It is not a tax on profit in the traditional sense. Instead, Texas asks you to calculate your “margin,” which is a modified version of your revenue. You can choose from several methods. Some businesses deduct the cost of goods they sell, others deduct wages, and others use a simple percentage of revenue. For example, a contractor might deduct the cost of materials, while a real estate agency might benefit more from deducting wages or using a simple percentage.
The OBBBA did not adjust franchise tax rules, but it did change federal deductions that affect your books. Since your margin is based on those numbers, reviewing your calculation for 2026 can help you avoid paying more than you need to.
Interest on business loans, credit lines, real estate financing, equipment leases, and vehicle loans is usually deductible. What many owners overlook is that loan origination fees, points, and certain refinancing charges may also be deductible, since these costs are tied directly to securing the financing. For example, the administrative fee you pay when you renew a credit line or the points you pay to lower a loan rate may qualify as deductible business expenses.
There are special IRS rules that restrict interest deductions for very large companies, but smaller businesses are usually not affected. The key is to record your loan costs the right way. When interest, points, and bank fees get lumped together by mistake, business owners often lose part of the deduction without even realizing it.
Section 179 continues to be one of the most beneficial deductions for small businesses in Texas. It allows you to deduct the entire cost of qualifying equipment in the year it is placed in service. This includes tools, vehicles, computers, software, office equipment, and machinery.
If you expect your income to rise in 2026, the timing of your equipment purchases can make a noticeable difference. Planning these purchases early helps you capture the deduction at the most strategic moment.
Bonus depreciation has been slowly decreasing each year. While the OBBBA made several tax provisions permanent, it did not restore full bonus depreciation. This means the percentage available in 2026 will be lower than in earlier years.
If you are considering a major purchase like a work truck, new machinery, or a large HVAC system, it may be worth comparing the deduction you will receive in the current year versus next year. The phase down makes timing more important, especially for trades where equipment needs are predictable.
Driving is a major part of business life for many Texans. Real estate agents drive to showings and closings. Insurance agents visit clients. HVAC technicians, plumbers, and electricians travel from job to job. All of this adds up to one of the most valuable deductions available.
You can choose between the standard mileage rate or actual vehicle expenses. If you use trucks or vans for work, you may qualify for accelerated depreciation as well. The key is to keep a clear, consistent mileage log. It is simple, but it saves business owners hundreds or thousands each year.
Great tax planning does not happen in one meeting at the end of the year. It happens in small steps throughout the year. When you review your numbers regularly, you give yourself the chance to adjust early, avoid surprises, and stay out of the last-minute rush. With the OBBBA changes shaping how several deductions work, keeping a year-round eye on your finances can make a real difference.
At Adam Traywick, CPA, we help Texas business owners build steady, proactive tax strategies that fit the way they operate.
If you want tax planning to feel calm and predictable in 2026, our Fort Worth team is ready to support you.
Let’s make sure your taxes work for you.
Until next time.
