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Business and Tax Planning: WHAT TO KNOW THIS COMING SEASON
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By Sarah Suydam
As we head into a new year, we also arrive at a new ta x season. To help you prepare, we spoke w ith William J. Caldwell, CPA, Compass US Accountants & Adv isors, and Lisa S. Curtin, CEO, Safe Travel Consultants LLC. KEY CHANGES AND ITEMS OF NOTE FOR 2026 Accord i ng to Ca ldwel l, t ravel a nd hospita l it y professionals w ill benefit from several positive updates in 2025 that carr y into the 2026 tax season. Among the most notable: »
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No Tax on Tips or Overtime: A major w in for tour guides, hospitalit y workers, and support staff. This is retroactive to Januar y 1, 2025, w it h tip income being non-ta xable up to $25,000. Employers should work w ith their payroll prov ider to ensure W2 and 1099s accurately ref lect tip income.
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Green Energ y Cred its E xpi r i ng December 31, 2025: Businesses mak ing clean-energ y upgrades to f leets, resorts, or offices should finalize purchases before year-end.
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Business Interest Deductions Restored: Capped onc e a g a i n at 3 0% of E BI T DA , t h i s prov ide s add it iona l breat h i ng room for compa n ies w it h loans.
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Corporate Tax Rate and Pass-Through Deduction: C corporations remain taxed at just 21%, while the 20% pass-through deduction for S Corps and sole proprietors has been permanently extended.
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Higher 1099 Reporting Threshold: Independent cont ractor pay ments now requ ire a 1099 on ly if they reach $2,000 or more (up from $600).
GROUPS TODAY Nov e mber/ D ecember 2 02 5
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Hospitality Pell Grants: Beginning July 2026, Pell f u nds w i l l cover shor t-ter m t ra i n i ng prog ra ms i n h ig h-dema nd f ield s. Travel a nd hospit a l it y professionals are expected to benefit, particularly in programs focused on high-sk ill or technolog ydriven roles. For tour operators, t his could mean better-trained staff at lower out-of-pocket costs.
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Expanded Research and Development Credits: Te c h n o l o g y i n n o v a t i o n s , s u c h a s b o o k i n g platforms, AI-driven customer tools, or operational efficiency systems, may qualif y for credits, which are retroactive to 2022.
AVOIDING COSTLY MISTAKES Ca ldwel l f inds t hat ma ny t ravel compa nies defau lt to the cash method, recording income when collected. T houg h he sug gest s t hat accr ua l accou nt i ng— recog n i z i ng revenue a nd ex penses i n t he yea r t he t ravel occ u rs—is a bet ter f it (ex . deposit s received i n 2025 for a 2026 depa r t u re belong i n 2026). Ot her pit fa l ls Ca ldwel l sees t ravel busi nesses of ten ma ke include overlook ing home-off ice, meal, and marketing deductions; letting shareholder or operating agreements go stale; commingling personal and business funds; and incorrectly categorizing staff either as an employee or independent contractor. “Schedule an end-of-year planning session w ith your accountant in November so changes happen before the books close,” he adv ised. “A nd make sure ta x returns are filed in a timely w indow, in addition to resolv ing or avoiding any outstanding tax notices.”