K-1s, 1099s, and the 2025 Tax Law: What Private-Market Investors Should Know This Season
February 11, 2026 · 9 min read · EbixMeridian Editorial
In brief
The July 2025 law made the individual rate structure and the 20% pass-through deduction permanent.
QSBS became more generous for stock issued after July 4, 2025, with tiered exclusions and higher caps.
K-1 timing has not changed: many private funds deliver in late summer, and extensions are normal, not alarming.
The difference between a calm and chaotic K-1 season is administrative, and it is solvable with the right infrastructure.
The 2026 filing season is the first full season under the tax law signed in July 2025, and it lands differently for private-market investors than for most taxpayers. The headlines were about permanence and rate stability. The practical story for anyone holding fund interests is in the details: pass-through treatment, small-business stock, and the annual choreography of K-1s. One note before the specifics: this article is educational, not tax advice. Filing decisions belong with your tax professional.
The headline changes
Individual rates made permanent
The rate structure introduced in 2017 no longer expires. Long-horizon planning, including multi-year private commitments, gets a stable baseline.
The 20% pass-through deduction made permanent
The qualified business income deduction matters to many fund investors because fund income often arrives as pass-through income.
SALT cap raised
The state and local tax deduction cap rose to $40,000 starting in 2025, with an income-based phase-down, and is scheduled to revert to $10,000 in 2030.
Estate and gift exemption set at $15 million
From 2026, per person and indexed. Families with concentrated private holdings gained planning certainty.
Full expensing restored
100% bonus depreciation returned on a permanent basis, which flows through to investors in funds holding capital-intensive businesses.
QSBS got meaningfully bigger
Qualified small business stock has long been one of the most favorable provisions in the code for venture and growth investors. For stock issued after July 4, 2025, the law replaced the single five-year cliff with a tiered exclusion: 50% of gain excluded after three years, 75% after four, and 100% after five. The per-issuer exclusion cap rose from $10 million to $15 million, and the company-size limit rose from $50 million to $75 million in gross assets. For advisors whose clients hold venture or growth-equity positions, holding-period tracking just became more valuable, not less.
The paperwork: K-1s, K-3s, and 1099s
None of the structural changes altered the rhythm of fund tax reporting. Partnerships issue Schedule K-1s, and while the nominal deadline is mid-March, funds routinely extend to September, with many delivering in late summer. Investors with international exposure may also receive Schedule K-3. Multi-state investors can face filing obligations in states where a fund operates. Meanwhile the 1099 side keeps evolving: the new 1099-DA covers digital-asset transactions beginning with the 2025 tax year, and the 1099-K threshold was restored to the old $20,000 and 200-transaction standard, undoing several years of churn.
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A late K-1 is not a crisis. An untracked K-1 is. The difference between the two is administrative, and it is entirely solvable.
What organized firms do differently
Track every expected document
Each commitment carries an expected K-1 or 1099. The firm knows what is outstanding at any moment, per client.
File extensions calmly and early
When funds signal late delivery, extensions are planned in advance rather than discovered in April.
Deliver through a vault, not an inbox
Tax documents post to a permissioned client portal with a complete audit trail, and the client's CPA gets access without email chains.
Automate the intake
Arriving documents are matched to clients and commitments automatically, so nothing depends on someone remembering.
Tax season, industrialized
EbixMeridian's private-markets module includes K-1 and 1099 tax-document automation, a permissioned document vault, and a complete audit trail, built into the same record that runs the rest of the practice.
The 2025 law rewarded long-horizon investors with something rare in tax policy: predictability. The firms that pair that predictability with disciplined administration will spend this season advising clients instead of chasing paperwork.
EbixMeridian
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