2026 Tax Law Changes: NYC & Long Island CPA Guide for Tax Filing Season (What to Do Now)

If you’re filing your 2025 tax return this season, you need to understand how the 2026 tax law changes actually affect what you owe right now.

After months of uncertainty about whether Tax Cuts and Jobs Act provisions would sunset, Congress passed the One Big Beautiful Bill Act in July 2025 — halfway through your 2025 tax year. This legislation fundamentally changed the tax landscape, and those changes directly impact the return you’re filing today.

For business owners and high-income earners across New York City — Manhattan, Brooklyn, Queens, Bronx, Staten Island — and throughout Long Island in Nassau County and Suffolk County, this filing season is different from any in recent years.

Here’s what the 2026 tax law changes mean for your 2025 return, and what you need to do now.

What the 2026 Tax Law Changes Actually Mean for Your 2025 Return

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made most Tax Cuts and Jobs Act provisions permanent. This wasn’t a temporary patch — these are now permanent changes to the tax code.

But here’s what matters for your 2025 filing: OBBBA became effective mid-year, which means your 2025 return operates under these new rules.

Tax rates remain at current levels: Individual brackets stayed at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For NYC taxpayers already facing combined federal, state, and local taxes, this provides certainty. Sundack CPA has been advising clients throughout New York City and Long Island on how these permanent rates affect both current filing and forward planning.

Qualified Business Income deduction is permanent: The Section 199A deduction for pass-through entities — LLCs, S-corps, partnerships — survived and is now permanent law. This 20% deduction remains fully available for your 2025 return, which is critical news for clients across Nassau County and Suffolk County who were bracing for elimination.

Estate and gift tax exemption increased: Not only did it not drop — it went up. The federal exemption rose to $15 million per person ($30 million for married couples) and is now permanent. High-net-worth families in Manhattan and Brooklyn gained substantial additional transfer capacity.

Standard deduction remains elevated: The higher TCJA standard deduction stays in place for 2025 and continues indexing for inflation going forward.

These 2026 tax law changes eliminated the sunset cliff that dominated tax planning through the first half of 2025. But mid-year passage creates complexity for your current return.

NY Tax Law Changes 2026: State and City Layers Still Matter

Federal certainty doesn’t simplify New York taxation.

New York residents pay:

• Federal income tax
• New York State income tax
• New York City income tax (city residents only)

New York State tax changes 2026 continue evolving through state budget processes. New York maintains its own progressive structure, and NYC adds local income tax on top. When federal rates remain at 37% and you layer in state and city rates, effective marginal rates in Manhattan or Brooklyn can exceed 50% for high earners.

This combined exposure is why Sundack CPA’s approach integrates federal, state, and local positioning — not just federal compliance.

SALT Cap Relief: Major Change for 2025 Returns

One of the most significant 2026 tax law changes for NYC and Long Island filers: the state and local tax deduction cap increased from $10,000 to $40,000 for the 2025 tax year.

For Manhattan residents paying substantial property and state income taxes, or Long Island homeowners in Nassau County and Suffolk County with high property tax bills, this is material relief on your current return.

The increased SALT cap applies to 2025 through 2029 tax years. It phases out for taxpayers with modified adjusted gross income over $500,000, then reverts to $10,000 after 2029.

If you were previously unable to deduct full SALT exposure, your 2025 return will show meaningful improvement. Sundack CPA is modeling SALT impact for clients across NYC and Long Island to determine optimal itemization strategy.

New Deductions Available on Your 2025 Return

The 2026 tax law changes introduced several new above-the-line deductions that apply to your 2025 return:

Tips deduction: Up to $25,000 annually for qualified tip income in IRS-designated occupations. Relevant for restaurant, hospitality, and service industry workers across New York City and Long Island.

Overtime deduction: Up to $12,500 ($25,000 joint filers) for overtime compensation exceeding regular rates. Phases out for higher earners.

Car loan interest deduction: Up to $10,000 for interest on loans used to purchase new vehicles for personal use. Phases out for higher earners.

Additional senior deduction: $6,000 additional deduction for taxpayers age 65 and older. Phases out for higher earners.

These provisions are temporary (2025-2028 tax years), but for eligible taxpayers, they provide immediate benefit on your current return. Proper documentation is required — Sundack CPA can help verify eligibility and substantiation requirements.

IRS Updates 2026: Inflation Adjustments for 2025

The IRS updates 2026 include annual inflation-indexed adjustments affecting your 2025 return:

• Tax bracket thresholds
• Retirement contribution limits
• Standard deduction amounts
• HSA contribution limits

These IRS updates 2026 prevent bracket creep but don’t change the structural law established by OBBBA. For tax preparation NYC clients, the interaction between inflation adjustments and the permanent provisions requires careful calculation.

What Small Business Owners Need to Know for 2025 Filing

For business owners operating in Manhattan, Brooklyn, Queens, Staten Island, Melville NY 11747, or anywhere across Nassau County and Suffolk County, the permanent QBI deduction is confirmed for your 2025 return.

However, mid-year passage of OBBBA creates specific considerations:

Entity structure analysis: With QBI now permanent rather than expiring, the long-term calculus shifted in July 2025. What made sense in Q1 2025 may not align with permanent law framework.

Compensation strategy for 2025: The balance between W-2 salary and pass-through distributions affects both QBI eligibility and payroll tax exposure. If you adjusted compensation mid-year based on sunset fears, your 2025 return may show suboptimal positioning.

Estimated payment reconciliation: If you adjusted quarterly estimates expecting higher rates or QBI loss, you may have overpaid. Sundack CPA has been working with small business tax planning NYC clients to reconcile estimates and optimize positioning.

State conformity tracking: New York State does not automatically conform to all federal provisions. NY tax law changes 2026 may create divergence requiring separate calculation and reporting.

This is not a straightforward filing year. The mid-year legislation creates complexity that requires professional analysis.

Tax Preparation vs. Strategic Advisory: What You Actually Need

This filing season requires more than compliance execution.

The 2026 tax law changes represent the most significant legislation since TCJA itself. Filing your 2025 return accurately under the new framework is baseline. Positioning your 2026-2030 strategy around permanent provisions is where value compounds.

Tax preparation NYC and tax preparation Long Island services handle compliance — getting your 2025 return filed correctly under the new rules.

Strategic tax advisory from a qualified NYC CPA or Long Island CPA means modeling forward exposure, restructuring entity design, and leveraging permanent provisions for multi-year optimization.

Sundack CPA provides both. Compliance keeps you legal. Strategy keeps you optimized.

If you’re searching for “CPA tax planning near me,” understand what you’re actually hiring for. Many firms can file returns. Fewer can reposition your structure around permanent tax law changes.

Who Should Act Immediately

You should engage professional guidance now if you are:

• A high-income W-2 employee in Manhattan or Brooklyn facing layered federal, state, and city exposure
• A business owner in Nassau County or Suffolk County with pass-through income who adjusted strategy expecting sunset
• A real estate investor in Queens managing depreciation, cost segregation, and 1031 exchanges
• A professional practice owner evaluating entity structure in light of permanent QBI
• A family with $10M+ net worth reviewing estate and gift strategies under the new $15M exemption

The permanent nature of these provisions removes future urgency — but it increases the cost of suboptimal current positioning.

Sundack CPA: Serving NYC & Long Island

Sundack CPA provides comprehensive tax preparation NYC and tax preparation Long Island services for individuals and business owners across:

• New York City (Manhattan, Brooklyn, Queens, Bronx, Staten Island)
• Long Island (Nassau County and Suffolk County)
• Melville, NY 11747

As a trusted tax advisor Long Island and NYC CPA firm with deep expertise in New York’s layered tax environment, we focus on both current compliance and forward strategic positioning under the post-OBBBA framework.

Our approach integrates:

• Federal law changes from the 2026 tax law changes
• NY tax law changes 2026 and state conformity analysis
• New York City local tax positioning
• Multi-year entity structure optimization
• Estate and succession planning under new exemption limits

We’re not a volume mill. We’re advisors who understand that mid-year legislation creates complexity requiring professional analysis — not software-based filing.

What to Do Before April 15

If you haven’t already engaged a qualified NYC CPA or Long Island CPA for your 2025 return:

1. Verify SALT cap positioning: The $40,000 cap may completely change your itemization decision. Don’t assume your prior-year approach still applies.
2. Evaluate new deduction eligibility: If you received tips, overtime, or purchased a vehicle in 2025, proper documentation is required to claim deductions.
3. Reconcile estimated payments: If you adjusted estimates expecting rate increases or QBI loss that didn’t occur, you may have overpaid. Recovery requires accurate reconciliation.
4. Review entity structure decisions: If you made mid-2025 entity changes based on sunset assumptions, your 2025 return may reflect suboptimal positioning. Forward correction requires analysis.
5. Model 2026 positioning: With permanent law now established, your 2026 estimated payments and structure should reflect long-term optimization, not short-term crisis response.

Sundack CPA is currently working with clients across New York City and Long Island on exactly these issues. The mid-year passage of OBBBA created a split-year complexity that most taxpayers don’t recognize until they file.

Final Takeaway: Certainty Requires Professional Analysis

The 2026 tax law changes delivered something taxpayers haven’t had in years: certainty about permanent tax rates, deductions, and exemptions.

But certainty doesn’t eliminate complexity. Mid-year passage means your 2025 return operates under rules that didn’t exist when the year started.

For individuals and business owners across NYC and Long Island, the question isn’t just “Did I calculate my 2025 taxes correctly?” The question is “Am I positioned optimally going forward under permanent law?”

If you want expert guidance on NY tax law changes 2026, IRS updates 2026, and strategic positioning for both your current return and forward planning, Sundack CPA provides the integrated federal, state, and local analysis New York taxpayers require.

This isn’t a software-filing situation. This is a professional-analysis requirement.

Sundack CPA — Serving clients across New York City and Long Island. Contact us to discuss your 2025 return and 2026 strategy.

📍 Melville, NY 11747
Serving Manhattan, Brooklyn, Queens, Bronx, Staten Island, Nassau County, and Suffolk County