News: 2026 Regulatory Shifts Impacting Herbal Supplement Deductions and Business Classification

News: 2026 Regulatory Shifts Impacting Herbal Supplement Deductions and Business Classification

Hook: Regulatory changes in 2026 tightened labeling and substantiation requirements for herbal supplements. These shifts affect how products are classified for tax purposes and whether certain expenses qualify for deductions or R&D credits.

Overview of the Changes

Key updates require improved supply-chain transparency, batch-level testing, and clearer claims. Companies making health claims must provide lab data and supply-chain traceability. That changes how expenses are capitalized and when they can be deducted.

Accounting Implications

• Batch testing costs — often previously expensed — may now need capitalization if tied to inventory qualifying for certain claims.
• R&D credit eligibility requires detailed project documentation demonstrating experimental activities.
• Marketing claims associated with clinical-like studies change deductibility profiles.

Brands should consult recent regulatory summaries that explain how labeling and sourcing requirements shift procurement and cost accounting. See the regulatory roundup for herbal supplements: News: 2026 Regulatory Shifts Impacting Herbal Supplements — What Brands and Consumers Need to Know.

Supply-Chain Documentation

Tax preparers must request batch certificates, COAs, and supplier attestations. Transparency in sourcing — particularly for exotic botanicals — now matters for both compliance and defensible deduction positions. Ingredient-specific supply-chain deep dives, like sea fennel extract sourcing, can be instructive for best practices: Ingredient Deep Dive: Sea Fennel Extract — Supply Chains, Testing, and Transparent Sourcing (2026).

R&D Credits & What Qualifies

If a company is developing new extraction methods or testing novel formulations, documenting hypotheses, experiments, and results will help establish R&D credit claims. Tax teams should create project logs and retain raw lab data.

Practical Steps for Accountants

1. Update your client intake to request batch-level COAs and supplier attestations.
2. Assess whether marketing-claim testing should be capitalized or expensed.
3. Document R&D projects thoroughly to support potential credits.
4. Coordinate with legal on labeling claims to avoid retroactive adjustments.

“In 2026, supply-chain transparency is no longer just an operational concern — it’s a tax one too.”

Actionable Checklist

• Request COAs for all botanical inputs.
• Create a standardized lab-test folder structure for audit readiness.
• Review marketing copy for tax risk related to capitalizing claim-support costs.

Bottom line: Herbal supplement brands must align procurement, legal, and accounting to ensure both regulatory and tax positions are defensible. Early coordination reduces the risk of restatements and preserves potential credits.