Businesses operating in Nassau and Suffolk counties are adjusting to a mix of local and federal tax updates that affect payroll payment thresholds, sales tax rates, and several federal deduction and credit rules relevant to the 2026 filing season. The changes include county-level updates in New York and federal provisions tied to the One, Big, Beautiful Bill Act.
The IRS opened the 2026 filing season on January 26. Some federal provisions described in the legislation apply retroactively and affect how certain deductions, credits, and income reporting are handled.
Payroll and Sales Tax Updates in Nassau and Suffolk
Nassau and Suffolk counties implemented updated payroll tax rules that introduce a $5,000 threshold for quarterly payments. Under the change, employers whose payroll tax liability falls under the threshold may follow a different deposit schedule than employers above the threshold.
Suffolk County also increased its sales and use tax rate from 4¼% to 4⅜% effective March 1, 2025. The article states the combined main return rate increased from 8⅝% to 8¾%. The change applies across categories that include utilities, heating fuels, clothing exemptions, and motor fuels. Businesses operating in both counties may need to apply different rates depending on transaction location.
Section 199A Qualified Business Income Deduction
The Section 199A qualified business income (QBI) deduction allows eligible pass-through entities to deduct up to 20% of qualified business income. Under the One, Big, Beautiful Bill Act, the article describes the QBI deduction as permanent.
The deduction generally applies to sole proprietorships, partnerships, S corporations, and some trusts and estates. Eligibility and the size of the deduction can be affected by income thresholds and limitations that apply to specified service trades or businesses.
Section 1202 Qualified Small Business Stock Updates
Qualified small business stock (QSBS) rules under Section 1202 were updated. The article states the holding period for QSBS benefits was reduced from five years to three years, with a phased-in exclusion structure.
The article also states the asset threshold for eligible corporations increased from $50 million to $75 million and the maximum gain exclusion increased from $10 million to $15 million. These changes apply to qualifying stock and are relevant to founders, investors, and C corporations that meet QSBS requirements.
Manufacturing, R&D, and Interest Expense Provisions
The article states manufacturing facilities became eligible for 100% bonus depreciation on new or significantly improved properties used for manufacturing. Under this treatment, qualifying costs may be deducted in the first year rather than depreciated over a longer recovery period.
The article also states research and development expenses returned to immediate deductibility after a period requiring amortization. Under immediate deductibility, qualifying R&D expenses may be deducted in the year incurred rather than spread over multiple years. The article also references the availability of R&D tax credits.
In addition, the article states interest expense deduction thresholds increased, which may allow some businesses to deduct more interest expense annually and apply previously disallowed amounts under the updated rules.
Market-Based Sourcing and Multistate Reporting
The article describes new market-based sourcing rules that apportion certain corporate income based on where customers receive the benefit of services or products rather than where the business performs the work. Under this approach, service revenue may be sourced to customer locations, including out-of-state jurisdictions.
The change can affect filing and reporting for businesses with customers in multiple states. It may also affect prior-year sourcing positions if a business previously sourced income differently, depending on the applicable rules and dates.
Industry Credits
The article references industry-specific tax credits for film production and semiconductor manufacturing. It also states the employer childcare credit maximum increased from $150,000 to $500,000, and that small businesses may be eligible for up to $600,000.
Sources
Estimated tax requirements for corporations | New York State Department of Taxation and Finance
Suffolk County Sales and Use Tax Rate Change | New York State Department of Taxation and Finances