How Much Do Small Businesses Pay in Taxes in 2026?

January 24, 2026
Published by Gonzales Group CPA

For small businesses, taxes aren’t just a year-end issue; they’re important to understand to help manage your cash flow throughout the year. Small business taxes for 2026 vary depending on a variety of factors, which is why it helps to turn to a CPA in San Antonio like those at the Gonzales Group. We can help you understand your responsibilities and options. Still, there are core elements that every small business owner should understand.

Federal Income Taxes
Small businesses such as sole proprietorships, partnerships, LLCs, and S-corporations are considered pass-through entities that distribute business income and deductions to their owners. They don’t typically pay corporate taxes, instead the owners pay taxes on the profits through their own personal income tax return.

Federal income tax rates for individuals range from 10% to 37% based on taxable income. These brackets are inflation-adjusted, so compared to previous years, you can earn a bit more before hitting higher tax rates. Typically, small business owners pay between 20% and 30% of net income once federal income tax and other taxes are included.

Employment & Payroll Taxes
If you hire employees, you face additional taxes. You will be responsible for paying unemployment taxes (FUTA) on the first few thousand dollars paid to each worker. In addition, you’re responsible for withholding employee Social Security and Medicare taxes (7.65%) and paying a matching 7.65%.

Self-Employment Taxes
On the other hand, if you have no employees and work for yourself, you are responsible for paying self-employment tax. This tax is for Social Security and Medicare. In 2026, the rate remains at 15.3% on net earnings. You pay 12.4% for Social Security up to a limit, and 2.9% for Medicare with no cap. Most self-employed business owners pay quarterly estimated taxes throughout the year.

State Taxes
Sole proprietors and pass-through entity owners typically pay state income taxes. Fortunately, Texas is one of the handful of states that does not charge state individual income tax. However, the business property taxes can be high.

While there are various taxes that small businesses are responsible for, there are also business deductions that can help ease the load. Working with a Gonzales Group CPA in San Antonio can help you best manage your taxes – and deductions – to stay up to date and make the most of your income and profits to further help your small business grow. To learn more about our various financial services for small businesses, reach out and contact us today.

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This post was written by Gonzales Group CPA