Compliance
IRS Inflation Updates & Penalty Relief: What Businesses Should Do Now
The IRS’s recent inflation-adjusted tax tables and guidance on penalty relief under the One, Big, Beautiful Bill (OBBB) offer critical pivots for businesses—here’s what you should know and act on.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
## What Has Changed?
- The IRS announced **tax year 2026 inflation adjustments** for **more than 60 tax provisions**, including rate schedules and standard deductions, as per *Revenue Procedure 2025-32*.([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- Under the OBBB, there is **transition relief** for businesses that must report **car loan interest received in 2025**, avoiding penalties under new interest reporting requirements.([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- The IRS also issued FAQs for 1099-K threshold rules, which under OBBB will revert to a $20,000 threshold.([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Why These Matter for Businesses
These changes affect income thresholds, reporting requirements, deduction limits, and potential penalties—it’s not just numbers changing, but compliance risk as well.
## Actionable Steps for Businesses and Tax Professionals
**1. Update your models and budgets:** Review your company’s forecasted taxes and cash flow projections in light of **new income tax brackets**, rate adjustments, and threshold changes.
**2. Review contracts and loan products:** Contracts that include interest payments or those involving car loans need scrutiny—they may now trigger new reporting requirements under OBBB.
**3. Stay compliant for reporting obligations:** For example, the 1099-K threshold reduction means that small sellers or platforms may be required to issue more 1099-Ks starting tax year 2025.
**4. Prepare for penalty relief windows:** Businesses may be eligible for relief if they missed earlier reporting requirements, especially during transition periods. Record decisions and policies showing efforts to comply.
## Case Example
A car dealership in Texas that finances customers’ car loans will now need to report interest received under the new OBBB guidance. Even if that interest is small, failure to report could result in penalties—unless eligibility is established for the transitional relief described in **Notice 2025-57**.([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Best Practices Moving Forward
- Document internal compliance policies related to OBBB changes.
- Use up-to-date accounting or tax software configured for the 2026 tax-year inflation adjustments.
- Keep close watch on IRS releases: Revenue Procedures and Notices related to inflation, OBBB adjustments, and penalty reliefs.
## Conclusion
With these inflationary adjustments and transitional provisions, the IRS is signaling flexibility—but only for those who act proactively. Aligning tax models, reporting practices, and compliance systems now will save businesses from confusion and cost in the 2026 tax year.