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What to Expect in the 2026 Tax Season: Changes Every Attorney Should Know
As a lawyer, you know preparation is everything.
When you wait too long, you’re forced to make decisions under pressure—and the IRS doesn’t care how busy your firm was. That’s why now is the time to understand what’s changing for the 2026 tax season, and how your firm can prepare to file smarter, reduce your liability, and avoid penalties.
If you’re a law firm owner, this isn’t just about taxes. It’s about:
- Preserving your profit.
- Maintaining compliance.
- And making sure your financial systems don’t break under Q1 pressure.
Here’s what you need to know now—before the clock resets.
1. IRS Enforcement Is Back—and Bigger in 2026
With the IRS funding boost from the Inflation Reduction Act still in effect, 2026 will continue the agency’s crackdown on:
- High-income earners (especially self-employed professionals)
- S Corp owners underpaying themselves
- Misclassified 1099 contractors
- Firms with messy trust accounting or unreconciled accounts
Translation for law firm owners: You are on the radar. And if your books are messy or your returns show inconsistencies? Expect questions—or an audit.
Pro Tip: Reconcile your IOLTA accounts before January and review your profit draws now, not after the IRS sends a notice.
2. 2026 Standard Deduction & Tax Bracket Adjustments
The IRS has already adjusted standard deductions and tax brackets for inflation. In 2026, that means:
- Higher thresholds for each tax bracket
- Slight increase in the standard deduction (projected ~$14,900 single / ~$29,800 married)
While this might sound like good news, it doesn’t guarantee savings. If your income rose significantly, you could still land in a higher bracket—especially without strategic planning.
3. Bonus Depreciation Is Changing Again
The accelerated bonus depreciation rule—which allowed 100% write-offs for certain business purchases—is phasing out. In 2026:
- Only 60% of qualifying purchases will be deductible in year one
- The rest must be depreciated over time
If you’re planning to upgrade office tech, lease new equipment, or invest in a company car for your law firm, check with your CPA now to avoid missing deductions.
4. Contractor vs. Employee Rules Will Be Enforced More Strictly
With ongoing scrutiny of gig economy classification, the IRS has clarified its 2024 guidelines—and enforcement will ramp up in 2026.
Lawyers hiring:
- Freelance paralegals
- Virtual assistants
- “Of Counsel” attorneys
- Part-time admins
Must classify and document correctly or risk fines, back taxes, and even bar complaints.
If your contractor is treated like an employee? You’ll need to file a W-2, not a 1099.
Check out our full guide to payroll vs. 1099 prep here.
5. More S Corp Audits, Especially for Solo Law Firm Owners
The IRS has publicly stated that S Corps with:
- Low reported officer salaries
- High K-1 distributions
- No reasonable basis for their compensation
Will be flagged for further review.
This is a major risk area for solo attorneys and small firms with S Corp status.
Make sure your CPA has reviewed:
- Your officer salary for 2025
- Whether your distributions align with IRS guidelines
- Whether you’re underpaying yourself (a red flag)
Don’t wait for an audit to find out.
6. Expect Tougher Scrutiny on Law Firm Deductions
Attorneys have historically been a high-earning, audit-prone group.
In 2026, expect:
- More scrutiny on home office deductions
- Travel and meal deductions to be heavily reviewed
- Increased interest in marketing spend, especially AI-powered or offshore contractors
Takeaway: Keep receipts. Document everything. And work with a CPA who knows what deductions apply to lawyers (and which will land you in hot water).
7. New 1099 Reporting Requirements
The 1099-K threshold is expected to remain lower in 2026 ($600 in many cases), which means:
- Platforms like Stripe, LawPay, PayPal, etc. will be sending more forms to you (and your clients)
- Duplicate income reporting could occur if your books aren’t clean
Make sure your accounting system correctly categorizes client payments, retainers, and trust account activity to avoid paying tax on money you never earned.
8. The Tax Season Timeline Will Still Be Tight
Most law firm owners wait until February or March to talk to their CPA. But by then, you’ve already:
- Lost out on retirement plan contributions
- Closed the window on bonus depreciation
- Missed the chance to adjust officer salary or payroll draws
Want to reduce your tax bill in 2026? Your planning deadline is December 31, 2025. After that, it’s just reporting. What to Do Now
Here’s how to prep for 2026 the smart way:
- Book a tax planning meeting before December 31 or first weeks of January
- Review your books now—not in February
- Check your IOLTA compliance status
- Ask your CPA about entity structure, officer salary, and deductions
- Don’t wait to clean up your books from 2025
This isn’t about scrambling in tax season.
This is about creating a system that makes tax season a non-event.
Let’s Make 2026 Your Most Profitable Year Yet
At Prestige Accounting & Consulting, we help attorneys:
- Reduce tax liability
- Stay compliant with bar rules
- Structure their firm for long-term financial growth
If you’re not sure your current accountant is ready for 2026, let’s talk.
Get your books in shape Align your tax strategy Keep more of what you earn
