Business and Tax Planning: What to Know This Coming Season

As we head into a new year, we also arrive at a new tax season. To help you prepare, we spoke with William J. Caldwell, CPA, Compass US Accountants & Advisors, and Lisa S. Curtin, CEO, Safe Travel Consultants LLC.

KEY CHANGES AND ITEMS OF NOTE FOR 2026

According to Caldwell, travel and hospitality professionals will benefit from several positive updates in 2025 that carry into the 2026 tax season. Among the most notable:

• No Tax on Tips or Overtime: A major win for tour guides, hospitality workers, and support staff. This is retroactive to January 1, 2025, with tip income being non-taxable up to $25,000. Employers should work with their payroll provider to ensure W2 and 1099s accurately reflect tip income.
• Green Energy Credits Expiring December 31, 2025: Businesses making clean-energy upgrades to fleets, resorts, or offices should finalize purchases before year-end.
• Business Interest Deductions Restored: Capped once again at 30% of EBITDA, this provides additional breathing room for companies with loans.
• 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.
• Higher 1099 Reporting Threshold: Independent contractor payments now require a 1099 only if they reach $2,000 or more (up from $600).
• Hospitality Pell Grants: Beginning July 2026, Pell funds will cover short-term training programs in high-demand fields. Travel and hospitality professionals are expected to benefit, particularly in programs focused on high-skill or technology-driven roles. For tour operators, this could mean better-trained staff at lower out-of-pocket costs.
• Expanded Research and Development Credits: Technology innovations, such as booking platforms, AI-driven customer tools, or operational efficiency systems, may qualify for credits, which are retroactive to 2022.

AVOIDING COSTLY MISTAKES

Caldwell finds that many travel companies default to the cash method, recording income when collected. Though he suggests that accrual accounting—recognizing revenue and expenses in the year the travel occurs—is a better fit (ex. deposits received in 2025 for a 2026 departure belong in 2026). Other pitfalls Caldwell sees travel businesses often make include overlooking home-office, 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 with your accountant in November so changes happen before the books close,” he advised. “And make sure tax returns are filed in a timely window, in addition to resolving or avoiding any outstanding tax notices.”

WHY BUSINESS CONTINUITY PLANNING ALSO MATTERS

Curtin explains that while succession planning prepares for an eventual handoff, business continuity planning (BCP) keeps you operating when the unexpected hits.

“Ensure your business is ready for any challenge with a solid continuity plan,” Curtin said. “What if systems fail during peak booking, a flood closes your office, a key seller departs, or the owner is incapacitated?”

BCPs typically include items like listing out critical functions, owners, and how each continues under stress. They also include scenario planning for loss of key staff, physical office damage, system outages or data breaches, and global disruptions. It’s wise to include vendor and client contact info, backup access to booking and payment systems, simple communication templates, and a remote-work playbook. Remember to test it annually and after major changes.

• Compass US Accountants & Advisors 
• Safe Travel Consultants LLC 

Written by Sarah Suydam, Managing Editor for Groups Today.

This article originally appeared in the Nov/Dec ’25 issue of Groups Today.

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