Planning Ahead: Key Legal Updates for Businesses in 2026
Shavon Smith • January 23, 2026
As 2026 gets underway, it’s a good time for small businesses to reflect on last year’s developments and prepare for what’s ahead. This newsletter highlights relevant updates in employment law, tax policy, and regulatory obligations across the DC-Metro area to help small businesses stay compliant while positioning themselves for growth.
Consider the following key actions as you plan for 2026 and beyond:
- Review Wage & Employment Law Developments:
Minimum wage increases across Washington, D.C., Maryland, and Virginia took effect or are scheduled for 2026, with additional compliance requirements for tipped employees. In July 2026, the DC and VA minimum wage will increase to $18.40/hour (or $10.30/hour for tipped workers) and $12.77/hour, respectively, while MD’s wage increases vary by county and number of employees, with different effective dates. It is especially imperative for small business owners to ensure that tipped employees’ combined wages and tips meet or exceed the required minimum wage to avoid liability under federal, state, and local laws.
In addition to wage compliance, employers should be aware of expanded restrictions on non-compete agreements, particularly in D.C. Effective January 1, 2026, D.C. employers can no longer enter non-compete agreements with employees earning less than $162,164 (or $270,274 for medical specialists). Small businesses should review restrictive covenants to mitigate compliance risk. - Assess Employee Leave and Statutory Obligations:
Recent legislative changes in Maryland expanded parental leave coverage for certain small employers not subject to the federal Family and Medical Leave Act. Effective October 1, 2025, covered employers under the Maryland Parental Leave Act are those that employ at least 15 but no more than 49 employees for each working day during 20 or more calendar workweeks in the current or preceding calendar year and are not covered by the federal FMLA. Eligible employees are those who request parental leave, have been employed by the employer for at least 12 months, and have worked 1,250 hours during the previous 12-month period.
Small businesses should confirm whether they fall within the revised coverage thresholds and that internal leave policies reflect current statutory obligations. - Overview of the One Big Beautiful Bill and 2026 Impacts:
Legislation enacted in 2025 as part of the One Big Beautiful Bill altered several provisions relevant to small businesses, including bonus depreciation, research and development expense deductions, and the qualified business income deduction.
Most notably, the legislation permanently restores 100% bonus depreciation, allowing businesses to immediately deduct the full cost of qualifying property placed in service after January 1, 2025, providing greater certainty for capital investment planning. Expanded deductions for domestic research and development expenses and the permanent extension of the 20% QBI deduction may also influence decisions regarding business structure, hiring, and long-term growth strategies. Strategic tax planning can help small businesses take full advantage of these changes in the 2026 tax year. - Confirm Contracting Compliance:
Maryland’s procurement reforms expanded access to state contracting opportunities for certified small businesses. The reform expanded Small Business Reserve thresholds by requiring that any procurement of $1,000,000 or less be awarded to a certified small business, provided the business is capable of performing the work. The reform also shortened payment timelines, requiring payment within 15 days of invoice approval, which may improve cash flow. Small Businesses interested in state contracts should ensure that required certifications are current and that internal compliance processes align with the updated procurement requirements.
A broader discussion of these developments and their implications for small businesses is provided in our comprehensive client alert which is available on our website.
Taking time now to review these areas, coordinate with legal and tax professionals, and update internal practices can help position your business for a compliant and successful 2026.
If you need help preparing your business for the new year, The SJS Law Firm is here to support you. Call (202) 505-5309 for a complimentary consultation.
