IT Budget

Your 2026 IT Budget Checklist

A new year means a new budget, but 2026 is bringing challenges unlike anything we’ve seen before. From immense digital inflation, the integration of AI, and the increasing threat of cybercrime, the facts are plain to see: maintaining your IT infrastructure costs more than it used to.

In this blog, we’re breaking down what’s changing, what an IT budget should include, and how a managed service provider (MSP) can help.

Let’s get into it.

Your 2026 IT Budget Checklist

  • Assess your current environment
  • Define your organization’s goals
  • Remove waste and redundancy
  • Review your hardware lifecycle
  • Plan for improved cybersecurity
  • Optimize your cloud costs and SaaS costs
  • Plan for training and onboarding
  • Partner with an MSP

IT Budget FAQs for 2026

What should I include in an IT budget for small businesses in 2026?
An IT budget should include hardware lifecycle planning, SaaS subscriptions, AI-enabled tools, cybersecurity, cloud infrastructure, compliance costs, employee training, and managed IT services.

How much should a business spend on its IT budget?

Most small and mid-sized businesses spend between 3-7% of annual revenue on IT, depending on industry, security requirements, and AI adoption.

Why are IT budgets increasing in 2026?

Rising SaaS subscription costs, AI add-ons, cybersecurity threats, hardware inflation, and evolving regulations are driving higher IT spending.

The 2026 IT Spending Forecast

There’s been a lot of recent volatility in the tech market. IDC reports a global memory shortage caused by AI data centers, while Gartner is claiming that IT spending will increase by roughly 10% in 2026. This trend highlights the growing importance of IT cost management forecasting and IT cost management. Add increasing software as a service (SaaS) subscription costs, and there’s no sugar coating it: IT budgets will need to be stretched further than ever.

The takeaway: IT budgets in 2026 must be flexible and regularly reviewed.

Budgeting for AI in 2026

Whether you intended it or not, AI is now a part of your organization. Your tech budget should account for:

  • AI in software: Copilot, Gemini, chatbots, and analytics tools
  • SaaS cost increases: Tier upgrades, pay-per-use AI, add-ons
  • Security & compliance: AI-driven antivirus, data policies
  • Hardware needs: More RAM, storage, or GPUs
  • Employee training: Learning new AI tools and updating workflows

The Core of Your 2026 IT Budget

Even with all these new changes, the core principles when planning your IT budget have remained consistent. These core areas should guide your planning:

1. Assess Your Current Environment

You can’t create a tech budget without knowing what you currently have. Here’s what you should look at when you take stock:</p

  • Hardware: computers, laptops, servers, mobile devices, etc.
  • Software: Core business applications, SaaS platforms, and operating systems
  • Licenses: Active users, unused or shared licenses, renewal dates, and contract terms
  • Security tools: Antivirus, MFA, firewalls, backup systems, email security, and monitoring tools

How an MSP helps

An MSP can perform a full IT assessment and SaaS audit, giving you a clear, accurate picture of your environment without having to guess. These assessments can identify:

  • Aging or end-of-life systems
  • Gaps in your security coverage
  • Unnecessary or forgotten expenses

2. Define Your Goals

Align your IT spending with your organization’s goals. Ask:

  • Will we hire or reduce employees?
  • Will we expand, relocate, or open new locations?
  • What hardware and software will we need this year?

How an MSP helps

MSPs ask the questions you’d never think of asking yourself – like new compliance requirements, scalability, and further tech investments – so your budget covers everything.

3. Remove Waste and Redundancy

Thanks to your earlier assessment, you should be able to locate unnecessary costs fit for trimming, such as:

  • Outdated systems that are still supported but no longer used
  • Unused licenses assigned to former or inactive employees
  • Redundant software performing the same function across departments
  • Legacy services that were never decommissioned after migrations or upgrades

How an MSP helps

MSPs provide a clear, up-to-date view of your infrastructure and guidance on what can be safely retired. They can also handle cleanup tasks, such as decommissioning old systems and reclaiming unused licenses, saving your team hours of time and keeping your IT spending under control.

4. Review Your Hardware Lifecycle

Aging hardware disrupts your spending plan when it inevitably fails. Typical replacement timelines include:

  • Laptops: 4-6 years
  • Computers: 5-6 years
  • Servers: 3-5 years (to stay within warranty, support, and performance expectations)

With rising hardware costs, it’s important you square away what needs replacing before a mid-year failure forces an unplanned expense.

How an MSP helps

With the help of monitoring tools, your MSP can:

  • Identify aging or at-risk systems before they become a problem
  • Replace and install old hardware
  • Source equipment through trusted vendors<//li>

A strong MSP, like The 20 MSP, will dive deep into your environment and make sure you know about everything that needs replacing.

5. Plan for Cybersecurity

AI is reshaping cybersecurity. Phishing attacks alone have increased by 1,265% since the rise of generative AI, with no signs of slowing. Traditional cybersecurity threats, like malware and ransomware, remain major risks. Investing in updated security protects your systems and keeps your cybersecurity spending under control.

Essential cybersecurity measures:

How an MSP helps

An MSP that takes cybersecurity seriously, like The 20 MSP, will:

  • Monitor system health and identify vulnerabilities
  • Set up MFA, encryption, backups, and antivirus
  • Provide predictable monthly pricing to avoid unexpected IT costs

That way, you stay safe and within your 2026 tech budget.

6. Regulatory Readiness

Compliance requirements are expanding, particularly in areas such as AI adoption, data privacy, and cybersecurity. Failing to meet regulations can result in fines, legal risk, and unexpected IT costs, pushing you far beyond your budget. Common compliance areas include:

  • HIPAA
  • SOC II
  • GDPR
  • CCPA
  • Industry-specific security standards

Staying ahead means staying in budget.

How an MSP helps

  • Monitors regulatory changes and makes sure your policies stay up to date
  • Implements security controls and documentation required for compliance
  • Provides certified guidance (Like The 20 MSP’s SOC II certification) to reduce risk
  • Keeps compliance efforts within your IT budget, avoiding unexpected costs.

7. Optimize your Cloud and SaaS Services

Your cloud is not a “set it and forget it.” To keep your 20206 IT cost management on track, you need to monitor usage, costs, and performance throughout the year. Key areas to plan for include:

  • Licenses and users – changes can increase or decrease costs.
  • Storage requirements – scaling up and down as needed
  • Security services – so your cloud data is protected
  • Redundant or underutilized software – eliminate waste to stay within budget

How an MSP helps

Like with your on-premises hardware, your MSP can be your watchful eye on your cloud services. They can:

  • Monitor cloud usage and performance in real time
  • Identified redundant services to reduce costs
  • Confirm cloud security is up to date
  • Provide clear and predictable reporting for accurate budgeting

8. Budget for Team Training

Whether you have new or experienced employees, you must keep your team up-to-date with current systems and security practices. Here’s what you need to plan for when creating your tech budget:

  • Cybersecurity training – protect against phishing, malware, and AI-driven attacks
  • Onboarding costs – time and resources for new employees
  • Tool integration updates – training for new or updated software, including AI tools

How an MSP helps

Many MSPs, like The 20 MSP, offer:

  • Structured training programs – from short videos to long-form modules
  • Assessments and quizzes – to verify understanding
  • Reduce the cost and complexity of in-house training – to maintain your IT spending plan

Common IT Budgeting Mistakes

Sticking to the above core principles is a solid start for creating your 2026 IT budget. However, even experienced teams can fall into common pitfalls. Watch out for:

  • Hidden or forgotten subscription costs – recurring software or cloud services that slip under the radar
  • Failing to plan for emergencies – unplanned hardware failures or cyber incidents can push you over budget.
  • Neglecting cybersecurity – outdated security can result in fines, breaches, or downtime
  • Delaying hardware replacement – aging equipment can lead to disruptive failures and high repair or replacement costs

Why Managed IT Services Matter for Your IT Budget

A managed IT service provider helps organizations control IT spending through predictable monthly pricing, proactive monitoring, cloud optimization, cybersecurity management, and long-term IT planning.

For many organizations, managed IT service pricing provides predictable monthly IT costs and simplifies IT budget management.

Stay Flexible This 2026

2026 is already shaping up to be a year of change, and flexibility is your way of staying on track. Rising hardware costs, volatile subscriptions, and the rapid adoption of AI make planning a significant challenge for any small to medium-sized business. Preparing now can mean the difference between a smooth year and a long road full of speed bumps.

At The 20 MSP, we help our clients design flexible, realistic tech budgets so they can burst into 2026 ready for whatever comes next. We work within your budget while making sure our own services are predictable.

If you need a partner that’ll help you create your 2026 IT budget, let’s talk.

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About The 20 MSP

As a leading provider of managed IT services, The 20 MSP serves thousands of businesses nationwide, including single and multi-location organizations, delivering white-glove service, secure and streamlined IT infrastructure, and 24/7/365 support. We believe in building lasting relationships with clients founded on trust, communication, and the delivery of high-value services for a fair and predictable price. Our clients’ success is our success, and we are committed to helping each and every organization we serve leverage technology to secure a competitive advantage and achieve new growth.