Small Business Tax Deductions: New Haven Entrepreneurs’ Guide to Maximizing Refuds

NEW HAVEN, CT – February 2026 – Tax season is here, and if you're running a business in New Haven, you need to know this: the 2026 tax year brings some of the most significant deduction opportunities we've seen in years. The One Big Beautiful Bill Act made several game-changing provisions permanent, and local entrepreneurs who understand these rules can keep significantly more money in their pockets.

Don't leave money on the table. Here's your guide to maximizing deductions this tax season.

The Big Changes You Can't Ignore!

Three major deductions just became permanent fixtures in the tax code. These aren't temporary breaks: they're here to stay, and they're powerful tools for reducing your tax bill.

Qualified Business Income (QBI) Deduction

You can now deduct up to 20% of your qualified business income, and the rules got better. The income thresholds where this deduction starts to phase out increased substantially. For single filers, the phase-out now begins at $75,000 (up from $50,000). For joint filers, it kicks in at $150,000 (up from $100,000).

Here's the part most New Haven business owners miss: even if you have just $1,000 in qualified business income but wouldn't normally qualify for the full deduction, you're guaranteed a minimum $400 deduction. That's real money.

100% Bonus Depreciation is Back

This is huge for anyone making capital investments. You can deduct 100% of the cost of eligible new and used assets in the year you place them in service. Machinery, equipment, vehicles, real estate improvements: all qualify.

Bought a new delivery van in January? Deduct the full cost this year. Upgraded your office computers? Write off the entire expense. This provision applies retroactively to January 19, 2025, so review your recent purchases.

Section 179 Expensing Doubled

The deduction limit jumped to $2.5 million, up from $1.25 million. The phase-out threshold climbed to $4 million. This allows small businesses to immediately expense equipment purchases rather than depreciating them over multiple years.

Use this strategically. If you were planning equipment purchases for next year, consider moving them into 2026 to maximize your deduction.

Overlooked Deductions: Stop Missing These!

Most New Haven entrepreneurs focus on the big-ticket items and miss these everyday deductions that add up fast.

Home Office Deduction

Working from your West River apartment or your Fair Haven house? You can deduct a portion of your rent or mortgage, utilities, internet, and home maintenance. You have two options:

• Simplified method: $5 per square foot of home office space (maximum 300 square feet)
• Regular method: Calculate actual expenses based on the percentage of your home used for business

The regular method usually yields a bigger deduction, but it requires detailed record-keeping. Either way, claim it.

Vehicle and Mileage

Track every business mile. Client meetings, supply runs, trips to the bank: they all count. For 2026, the standard mileage rate stands at 67 cents per mile.

Keep a mileage log. Use an app. Save parking receipts and toll records. These expenses accumulate quickly, especially if you're traveling between New Haven and surrounding areas for client meetings.

Business Meals and Entertainment

Business meals are 50% deductible when you're discussing business with clients, prospects, or business associates. The meal must be ordinary and necessary for your business, and you need to document the business purpose.

Pro tip: Write the business topic and attendees on the receipt before you file it away.

Travel Expenses

Attending conferences? Meeting with clients out of town? Your airfare, hotels, rental cars, and 50% of meals are deductible. Keep detailed records showing the business purpose of each trip.

Professional Development

Courses, certifications, professional memberships, industry publications: all deductible. Invested in a marketing course to grow your business? That's a write-off. Subscribed to industry journals? Deduct them.

Insurance Premiums

Business insurance, professional liability insurance, and health insurance for self-employed individuals are all deductible. If you're self-employed and paying for your own health insurance, you can deduct 100% of the premiums.

Office Supplies and Software

Everything from printer paper to cloud storage subscriptions counts. QuickBooks, Adobe Creative Cloud, project management tools: track these monthly subscriptions because they're fully deductible.

Contract Labor and Freelancers

Hired a freelance web designer? Brought in a bookkeeper? These payments are deductible business expenses. Remember to issue 1099-NEC forms to contractors you paid $600 or more during the year.

Connecticut-Specific Tax Advantages

Living and working in Connecticut comes with specific tax considerations that can work in your favor.

Enhanced SALT Deduction

The State and Local Tax (SALT) deduction cap increased to $40,000 for 2025 (up from the previous $10,000 limit). This applies to state income taxes, property taxes, and local taxes. Connecticut has some of the highest property taxes in the nation, so this expanded cap provides significant relief.

This increased cap is scheduled to drop back to $10,000 in 2030 unless Congress extends it. Maximize this benefit while it's available.

Research and Development Expensing

If your New Haven business involves innovation or product development, R&D costs are now fully deductible again. Software development, prototype creation, process improvement research: document these activities and claim the deduction.

Tax Credits You Should Know About

Deductions reduce your taxable income. Credits reduce your actual tax bill dollar-for-dollar. They're even more valuable.

Employer Childcare Credit

Providing childcare benefits to your employees? The tax credit increased substantially for 2026. Most employers can now claim 40% of eligible costs (up from 25%), with a maximum annual credit of $500,000 (up from $150,000).

Small businesses can claim an even higher credit of 50% of eligible costs with a $600,000 maximum.

Energy Efficiency Credits

Made your business more energy-efficient? Installed solar panels? Upgraded to energy-efficient HVAC systems? Multiple credits exist for these improvements.

Document Everything Now

Good record-keeping makes the difference between claiming deductions confidently and leaving money on the table.

Keep these practices in place:

• Maintain separate business and personal bank accounts
• Save all receipts and organize them by category
• Use accounting software to track income and expenses in real-time
• Document the business purpose of expenses, especially travel and meals
• Keep records for at least seven years
• Store digital copies of important documents

Poor documentation is the primary reason the IRS disallows deductions during audits. Protect yourself.

Strategic Tax Planning Actions

To maximize your 2026 tax benefits, take these steps now:

1. Review your business structure. Are you operating as a sole proprietor, LLC, S-corp, or C-corp? Your structure affects which deductions you can claim and how you claim them.

2. Plan major purchases strategically. Need new equipment? The 100% bonus depreciation and enhanced Section 179 limits make 2026 an excellent year for capital investments.

3. Track estimated tax payments. Self-employed individuals and business owners must make quarterly estimated tax payments. Missing these payments triggers penalties and interest.

4. Coordinate federal and state returns. Connecticut state tax returns must align with your federal return. Errors or inconsistencies can delay refunds or trigger audits.

5. Consider retirement contributions. SEP-IRAs, Solo 401(k)s, and other retirement plans for self-employed individuals offer both tax deductions and long-term financial benefits.

Why Professional Tax Preparation New Haven Business Owners Trust Matters

Tax laws are complex and constantly changing. The deductions and credits outlined here represent just a fraction of what might be available to your specific business situation.

A concierge tax pro who understands both federal tax law and Connecticut-specific regulations can identify opportunities you might miss on your own. They can also help you plan strategically for future years, structure your business optimally, and defend your return if questions arise.

At Jose's Tax Service, we specialize in helping New Haven entrepreneurs maximize tax refunds while staying compliant with all regulations. We don't just prepare returns: we provide year-round guidance to help you make tax-smart business decisions.

Our personalized approach means we take time to understand your business, your goals, and your unique situation. We identify every deduction and credit you're entitled to claim, prepare accurate returns, and give you confidence that everything is done right.

File with Confidence

Tax season doesn't have to be stressful. With proper planning, thorough documentation, and expert guidance, you can minimize your tax liability and keep more of your hard-earned money.

The 2026 tax year offers exceptional opportunities for New Haven business owners who understand how to leverage the available deductions and credits. Don't navigate this alone.

Ready to maximize your refund? Visit Jose's Tax Service or contact us today to schedule a consultation. Let's make sure you're claiming everything you're entitled to: and not a penny more than you actually owe.

Your business deserves a tax professional who treats your return with the same care and attention you put into your work. That's exactly what you'll get with our concierge tax preparation services.

File smart. File confident. File with Jose's Tax Service.