While many taxpayers are still gathering their documents to file their 2025 taxes, we are looking ahead to changes coming in 2026 and 2027. Knowing what’s coming can help you avoid surprises and take advantage of new opportunities. Below is an overview of a few key upcoming changes and what they could mean for you and/or your business.
BUSINESS CHANGES
Employer-Provided Meals
Starting in 2026, most businesses will no longer be able to deduct the cost of providing onsite meals for employees, including those provided at onsite cafeterias. This includes meals provided for the convenience of the employer. Prior to 2026, these meals would have been allowed a 50% deduction; however, as part of the One Big Beautiful Bill Act of 2025, the tax deduction has been removed with limited exceptions.
Business meals with clients, vendors, third parties, etc. or meals during travel will remain 50% deductible.
Meals that were previously 100% deductible will remain 100% deductible. This includes employee holiday parties/social events, meals provided as part of a promotional event geared towards non-employee engagement, and meals that are added to the employee’s compensation.
Industries such as restaurants and catering businesses will continue to be able to deduct the cost of food purchased to be sold as part of their business operations.
If you provide your employees with onsite meals, you will need to track those costs separately beginning in 2026 to ensure accurate reporting on the tax return.
Charitable Donations
Starting in 2026, Corporations will have a 1.0% taxable income floor that must be met before charitable donations will be deductible. For example: If you donate $10,000 and your taxable income is $750,000, your new donation floor is $7,500 resulting in only $2,500 of your charitable donations being deductible. The floor amount is not carried forward and will be permanently lost as a tax benefit.
INDIVIDUAL CHANGES
Gambling Deductions
Prior to 2026, you were able to offset 100% of gambling winning with gambling losses. However, starting in 2026, gambling losses will be limited to 90% of gambling winnings. This could result in a situation where you are paying taxes on funds you no longer have. For example: If you win $5,000 gambling, but lose $6,000, you can only report up to $4,500 ($5,000 x 90%) of losses on your tax return and will be subject to tax on $500.
Additionally, your losses are reported on Schedule A and are only deductible if you itemize (this is not a change from the 2025 and prior rules). If you do not itemize, 100% of your gambling winnings will be taxable.
Charitable Donations
Starting in 2026, individuals who do not itemize their deductions, will have the ability to deduct cash donations to qualified charities of up to $2,000 if married filing jointly ($1,000 for single filers). Donations to donor-advised funds and noncash donations are not eligible for this deduction. Please be sure to maintain receipts for donations greater than $250 in order to claim this new deduction.
For individuals who itemize their deductions, there is now a 0.5% of adjusted gross income (AGI) floor that must be met before your charitable donations will be deductible. For example: If you donate $5,000 and your AGI is $200,000, your new donation floor is $1,000 resulting in only $4,000 of your charitable donations being deductible. The floor amount is not carried forward and will be permanently lost as a tax benefit.
Starting in 2027, individual taxpayers will be eligible for a new federal tax credit for donations made to K-12 Scholarship Granting Organizations (SGO). This is a dollar-for-dollar tax credit, meaning if you give an SGO $1,000, your tax liability will be reduced by $1,000. The maximum credit is $3,400 for taxpayers who are married filing joint ($1,700 for single filers).
To claim the credit, you must reside in the same state as the SGO you contribute to and the state must have opted to participate in the program. Each state must determine which organizations qualify as an SGO, so taxpayers will want to watch for those lists before making any contributions to be sure they will qualify for this credit.
If you have any questions, please contact your AHP Representative.