If you run a business as a partnership, an LLC taxed as a partnership, or an S corporation, you’re operating what’s known as a “pass‑through” entity. These businesses don’t pay federal income tax directly. Instead, income, deductions, and credits flow through to the owners’ personal tax returns. Here’s what you need to know about filing requirements and recent tax law changes.
March 16 Deadline
Even though pass‑through entities don’t owe federal tax at the entity level, they must still file a federal return.
- Partnerships and LLCs taxed as partnerships file Form 1065.
- S corporations file Form 1120‑S.
For calendar‑year entities, the filing deadline for the 2025 tax year is March 16, 2026 (since March 15 falls on a Sunday). You can extend this deadline to September 15, 2026 by filing Form 7004. Remember, if you extend the entity’s return, owners will likely also need to extend their individual returns to October 15, 2026.
Schedules K‑1
Each year, pass‑through entities must issue Schedules K‑1 to owners, reporting their share of income, deductions, and credits. These forms can be sent electronically and must be filed with the entity’s return.
- Owners rely on K‑1s to prepare their personal returns.
- If the entity’s deadline is extended to September 15, 2026, that date also becomes the deadline for issuing K‑1s.
Three Key Tax Law Changes
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, introduced several important updates affecting 2025 returns:
- First‑Year Depreciation
- Restored 100% first‑year depreciation for eligible assets placed in service after January 19, 2025.
- Increased Section 179 expensing limit to $2.5 million, with phase‑out starting at $4 million.
- Extended 100% depreciation to qualified production property, such as factory buildings.
- Research & Experimental (R&E) Expenditures
- Businesses can now immediately deduct eligible domestic R&E costs beginning in 2025.
- Small businesses may apply this rule retroactively to 2022–2024.
- Taxpayers can elect to write off remaining unamortized R&E costs over one or two years starting in 2025.
- Business Interest Expense Deductions
- More favorable rules now apply for tax years beginning in 2025.
- While many small and midsize businesses are exempt from limitations, it’s important to confirm your entity’s status.
Time to Get Rolling
The March 16 deadline is approaching quickly. Even if you plan to extend, action must be taken by that date. Reach out to your tax advisor to ensure your entity and individual filings are on track.
© 2026