If you run a professional services firm or a small business, there are some new tax rules for Wisconsin business owners that come into play in 2026 that you should know about. Most of the tax laws were passed in 2025. What makes this year important is that those changes are now fully in effect and showing up in real decisions.
For many business owners, this is the first full year where these rules apply across an entire tax cycle. That means quarterly estimates, payroll decisions, contractor payments, and year-end planning are all happening under the updated rules, not just partway through the year.
In this article, we’ll focus on the state and federal tax law changes that are most relevant to Wisconsin business owners, especially agencies, consultancies, creative firms, and other service-based businesses. Rather than covering every technical update, we’ll focus on the changes that most directly affect cash flow, compliance, and decision-making in 2026.
Wisconsin Income Tax Changes: More Income at the 4.4% Rate
One of the most relevant state level changes is Wisconsin’s expansion of the 4.4% individual income tax bracket. A larger portion of taxable income now sits in that 4.4 percent bracket before moving into higher Wisconsin tax rates. For owners of S corporations, partnerships, and LLCs, this matters because business profit flows onto the owner’s personal return.
This means that Wisconsin adjusted how income is distributed across tax brackets, not just the rates themselves, so even if your business earns the same amount as last year, the way that income is taxed at the state level may be different.
| 2025 | 2026 | |
|---|---|---|
| Single | $14,680 – $28,640 | $14,680 – $50,480 |
| Married (Filing Jointly) | $19,580 – $38,190 | $19,580 – $67,300 |
For many owners, it means the mix of rates used to calculate Wisconsin tax is different from what it was in prior years. This tends to show up in estimated tax payments. If estimates are still based on older bracket assumptions, they can be slightly off even when revenue stays the same.
Re-forecasting estimates using the current bracket structure helps align payments with how income is actually taxed in 2026. This is especially relevant for business owners with uneven income throughout the year, where quarterly profit does not come in evenly.
The 20% QBI Deduction Is Still Here
For several years, business owners were told that the 20% Qualified Business Income deduction was scheduled to expire. That would have resulted in a noticeable increase in effective tax rates for many pass-through businesses.
That expiration did not happen. The QBI deduction was made permanent in 2025, which means the rules that applied in recent years continue into 2026 and beyond.
That said, the QBI deduction is still subject to income thresholds and phase-outs that still matter for many Wisconsin business owners.
For 2026, the QBI thresholds are:
- For single filers, the full 20% deduction is available up to roughly $201,775 of taxable income.
- For married filing jointly, the full deduction applies up to roughly $403,500 of taxable income.
Above those levels, the deduction begins to phase out depending on the type of business you operate, how much you pay in W-2 wages, and whether the business owns qualifying depreciable property.
For service-based businesses, including many professional services firms, the deduction can phase out entirely once income exceeds the upper threshold. That means business owners near or above these income levels still need to pay attention to how income, compensation, and business structure interact.
For most businesses below the phase-out range, the key takeaway is stability. The deduction remains available, and existing entity structures and compensation approaches do not need to change solely because of QBI concerns.
Film and Production Tax Credits: Relevant for Agencies and Creative Firms
Wisconsin expanded and introduced film and production-related tax credits for tax years beginning after December 31, 2025. This is a new incentive designed to attract productions to the state and give local creative businesses a chance to benefit from state tax credits.
Productions can qualify for a 30% tax credit on certain in-state expenses, including wages paid to Wisconsin employees and other qualified production expenditures. The credit is subject to program limits and qualification requirements, so documentation and cost tracking are critical.
For marketing agencies, creative firms, production studios, and businesses that support film or media projects, this credit can materially reduce Wisconsin tax liability. It may also increase demand for local services as more productions choose to operate in the state.
Higher 1099 Reporting Thresholds
This is one of the most immediately noticeable changes for many small businesses.
For payments made after December 31, 2025, the threshold for filing Forms 1099-NEC and 1099-MISC increases from $600 to $2,000.
That means many businesses will issue fewer 1099s in 2026. This reduces reporting burden, especially for businesses that work with a large number of smaller contractors.
At the same time, accounting systems and processes need to reflect the new threshold. Otherwise, businesses can end up tracking vendors under outdated rules or creating inconsistencies between internal records and filed forms.
Bonus Depreciation Remains at 100%
Under prior law, bonus depreciation was expected to drop sharply in 2026, but that phase down no longer applies.
Bonus depreciation was permanently restored to 100% for qualifying property acquired after January 19, 2025. As a result, assets placed in service in 2026 can still be fully expensed if they qualify. For business owners, this affects how decisions are decisions are made around equipment, technology, and office improvements.
This does not mean every purchase should be rushed, but it does change the tax impact of investment decisions compared to what many owners were expecting under the prior phase-down schedule.
How Affinity Accounting Supports Wisconsin Business Owners
Affinity Accounting works with business owners in Wisconsin to keep bookkeeping, accounting and taxes aligned. We help with accurate monthly reporting, realistic forecasts, properly set tax estimates, and guidance on owner pay and growth decisions.
Our goal is to help business owners understand how tax rules affect real-world decisions throughout the year, not just at filing time.
If you want help aligning your financials and tax obligations for 2026, schedule a consultation with us.
We’d be happy to help you avoid surprises and make informed decisions as the year unfolds.
