Bayou City Tax Insights: Navigating the 2026 Season and the OBBBA

A Special Briefing for Texas Individuals and Small Business Owners

A Note from Lamar: Growing Together in 2026

As we turn the calendar to 2026, I want to take a moment to welcome you to another tax season. For over four decades, I’ve navigated the shifting sands of the American tax code—from the early days of 1982 to the digital transformations we see today. My goal at Bayou City Solutions has always been to provide more than just a signature on a return; I strive to be a steady hand and a reliable resource for our Texas community.

To ensure I’m providing the highest level of service, I’ve dedicated much of this past year to advanced professional development. I am currently in the process of pursuing the Enrolled Agent (EA) designation—the highest credential the IRS awards to tax practitioners. Having successfully completed the first phase of this rigorous three-part examination process, I am more energized than ever to apply this deepened knowledge of tax law to your specific needs. This commitment to continuous learning is my promise to you: as the laws evolve, so will the expertise I bring to your kitchen table or boardroom.

When I’m not diving into tax code, you might find me in a field somewhere in Houston with a drone controller in my hand. My newer venture, IRIS UAS (DRONE) SERVICES, has given me a fresh perspective on the challenges and excitement of starting a business in 2023. While my passion for aerial photography is soaring, my feet remain firmly planted in the world of accounting and tax preparation. Whether I'm capturing the perfect sunset over a commercial property or reconciling a complex ledger, I apply the same level of precision and dedication to everything I do.

Navigating the "One Big Beautiful Bill Act" (OBBBA)

The landscape for the 2025 tax year (the returns we are filing now in 2026) has been significantly reshaped by the hypothetical One Big Beautiful Bill Act (OBBBA). This federal legislation represents one of the most substantial overhauls in recent years, aimed at balancing middle-class relief with simplified reporting for small business owners.

High-Level Summary

The OBBBA focuses on "Practical Prosperity," primarily targeting relief for aging taxpayers and streamlining the path for entrepreneurs. It seeks to consolidate several expiring provisions from previous years while introducing targeted credits to combat the rising cost of living.

Positive Impacts for Individuals

• The "Silver Independence" Credit: In a move that directly benefits many of our long-term clients, the OBBBA introduces a $6,000 refundable tax credit for filers aged 65 and older. This is a "refundable" credit, meaning it can give you money back even if you don't owe any tax. Whether you are fully retired or, like me, still balancing business ventures, this credit is designed to offset healthcare and cost-of-living increases.
• Adjusted "Middle-Market" Tax Brackets: The Act has widened the 12% and 22% tax brackets. This means more of your income stays in the lower-percentage tiers before "jumping" to the next bracket, providing a subtle but effective reduction in the overall effective tax rate for most Texas families.
• Enhanced Energy Efficiency Incentives: For those who made home improvements in 2025, the OBBBA has expanded the credits for solar, heat pumps, and high-efficiency windows. This is particularly relevant here in Texas, where managing cooling costs is a year-round priority.

Positive Impacts for Small Businesses

• The "Micro-Business" Safe Harbor: The OBBBA introduces simplified reporting for businesses with gross receipts under $100,000. This reduces the complexity of record-keeping requirements for solo practitioners and side-hustle entrepreneurs, such as those in digital services or drone photography.
• Permanent 100% Bonus Depreciation: In a win for capital-intensive businesses, the Act has reinstated and made permanent the 100% bonus depreciation for qualified equipment. If your business invested in new machinery, vehicles, or technology (like UAS/drone equipment or IT infrastructure) in 2025, you may be able to deduct the full cost in the first year.

Potential Drawbacks & Planning Areas

• Individual: The "Digital Asset" Reporting Threshold: While not a "tax hike," the OBBBA mandates stricter reporting for digital assets and third-party payment platforms (like Venmo or PayPal) for personal transactions exceeding $5,000. We will need to carefully distinguish between personal reimbursements and taxable income to avoid unnecessary IRS inquiries.
• Business: Phase-out of Certain "Green" Vehicle Credits: While some credits expanded, others—specifically for high-end luxury electric vehicles used for business—have begun a steeper phase-out. If you purchased an EV for your business late in 2025, we will need to verify the specific manufacturing date to determine your credit eligibility.

Other Key 2025 Tax Year Updates

While the OBBBA takes center stage, several "standard" updates are equally important for your 2025 filing.

2025 Standard Deduction Amounts

Most people take the standard deduction, which lets you subtract a set amount from your income based on your filing status. If your deductible expenses and losses are more than the standard deduction, you can save money by itemizing.

For the 2025 tax year, the standard deduction amounts have increased:

Note for Texans: Additional deduction amounts still apply if you are over 65 or blind. However, if you are married filing separately, you cannot take the standard deduction if your spouse chooses to itemize; both must choose the same method.

Business Structure Reminders

For my clients operating as an LLC, remember that the IRS treats you based on the number of members and elections made.

• Single-Member LLCs: These are typically treated as "disregarded entities," with income and expenses reported on your personal return.
• Multi-Member LLCs: These default to partnership classification , requiring a Form 1065.
• Corporate Election: Any LLC can elect to be treated as a corporation by filing Form 8832. This is a strategic conversation we should have if your business income has grown significantly this year.

Proactive Tax Planning Reminders

Preparation is the best antidote to tax-season stress. As you gather your materials, keep these "best practices" in mind:

1. Gather Your Documents Early: You'll need documents to show expenses or losses you want to deduct. This includes W-2s, 1099s, and receipts for deductible expenses like mortgage interest or charitable donations.
2. Maximize "Above-the-Line" Deductions: You can deduct certain expenses whether you take the standard deduction or itemize. This includes money put into an IRA , Health Savings Accounts (HSA) , and student loan interest.
3. Texas Specifics: Since we don't have a state income tax in Texas, the federal deduction for state and local taxes (SALT) primarily focuses on your property taxes and sales taxes. If you made a major purchase in 2025 (like a new vehicle or drone equipment), keep those sales tax receipts!

Moving Forward Together

Tax law can often feel like a foreign language, but my job is to act as your translator and advocate. Whether you are navigating the complexities of a multi-state business or simply looking to maximize your retirement credits, we are here to ensure you file with confidence.

Next Steps:

• Schedule Your Appointment: Visit bayoucitysolutions.net to book your 2026 tax review.
• Organize Your Records: Use our client portal to securely upload your 2025 forms. https://www.bayoucitysolutions.net/quick-send.php
• Consultation: We can meet in person at our Houston office or via a secure video call.

Lamar Davis Principal, Bayou City Solutions, LLC Phone: (713) 401-9627

Email: lamar@bayoucitysolutions.net

Website: www.bayoucitysolutions.net

Disclaimer

The information contained in this newsletter is for general educational purposes only and does not constitute specific legal, financial, or tax advice. Tax laws, including the hypothetical provisions of the OBBBA, are subject to change and interpretation. Every individual and business situation is unique; therefore, you should consult with a qualified tax professional regarding your specific circumstances before taking any action.