Microsoft Incentives in FY26

Distribution: Making the Most of Microsoft Incentives in FY26

For anyone working in Microsoft distribution, incentives are a major part of the business strategy. They’re not just a nice bonus, they can make a real difference to profitability. But the challenge is that these programs change every year, and staying on top of them is key.

With Microsoft’s MCAPS priorities for FY26 now shaping the partner ecosystem, it’s the right time to review what’s new and make sure you’re taking full advantage. This article is designed to give you a clear, easy-to-follow overview of what’s available this year.

Whether you’re looking to maximize your current incentive opportunities or catch up on areas you may have missed before, this guide will help you stay ahead and make the most of every investment available to you.

Microsoft Investments Aligned with MCAPS Priorities

For FY26, Microsoft has updated its focus areas to align with the latest MCAPS priorities. These priorities shape how partners and distributors should position themselves in the market and, more importantly, how Microsoft structures its investments and incentives.

The core solution areas for FY26 are:

• AI Business Solutions: Scaling Copilot across devices and roles is central. Distributors should promote adoption of Microsoft 365 Copilot, Dynamics 365 with embedded AI, and other AI-powered productivity solutions. This is where cross-selling and upselling can yield significant returns.
• Cloud & AI Platforms: With cloud modernization and frontier AI at the forefront, distributors must support customers migrating to Azure services, adopting Azure Kubernetes Service, Microsoft Fabric, and leveraging GitHub and Azure AI infrastructure for innovation.
• Security: Strengthening the security foundation is a non-negotiable priority. Distributors should guide partners in upselling Microsoft 365 E5, attaching Microsoft Sentinel, and driving adoption of Defender for Business, especially in the SMB segment.

All program benefits, including incentives and funding, are directly aligned with these solution areas.

Eligibility and Program Requirements

For Microsoft distributors, FY26 introduces some important updates to keep in mind—especially as you approach your anniversary date. Microsoft is also introducing a new Distributor-focused Solutions Partner designation later in FY26. This will recognize distributors for their value-add services and technology delivery to resellers.

To continue operating as a distributor, you’ll need to ensure the following requirements are met:

• $30M+ CSP revenue per authorized region (Trailing Twelve Months Revenue)
• Pass channel and security capability assessments
• Maintain Advanced or Premier Support
• Complete the mandatory Partner Center security score requirements
  

It’s also essential to keep an eye on your partner channel, as their eligibility for incentives has been updated. For indirect resellers, there is now a $25,000 TTM (Trailing Twelve Months) revenue requirement to qualify for incentives.

Empowering Your Partner Channel: Incentives for Indirect Resellers

For indirect resellers, success in FY26 is closely tied to solution designations and their performance across key areas, including Modern Work and Security, Business Applications, Azure, and Security. Reviewing the annual Microsoft guide is essential, as it provides a comprehensive overview of available incentives and how partners can qualify.

Distributors can play a crucial role in helping their resellers maximize these opportunities by:

• Enabling Specialization: Provide training and resources that help partners achieve new solution partner designations or reach the minimum 25 capability points.
• Driving High-Value Products: Focus on promoting products with the highest incentives, such as Microsoft 365 E5, Copilot, and Azure services.
• Educating on the Growth Accelerator: Highlight the Growth Accelerator incentive program, a powerful opportunity for partners to earn significant revenue by upselling and cross-selling within their existing customer base.
  

And of course, don’t forget that to support your resellers and expand your business, you can leverage Microsoft co-op funds. These funds are designed to support activities in three main areas: partner skilling, demand generation, and market development.

For example:

• Conduct internal training days for your resellers, co-funded by Microsoft.
• Support demand generation initiatives, including marketing campaigns and product advertising.
• Leverage market development activities, such as Proof of Concepts (POCs), and other programs that help resellers engage customers and drive sales.
  

By actively using these resources and programs, you and your indirect resellers can fully capitalize on FY26 incentives, ensuring growth and alignment with Microsoft’s priorities.

Staying Informed: Resources and Upcoming Events

To ensure you and your indirect resellers remain aligned with Microsoft's evolving incentive landscape in FY26, it's crucial to stay updated on program changes, upcoming events, and available resources. Here are some key avenues to explore:

• Partner Incentives Overview: Partner Incentives Portal
• Monthly CSP Community Q&A Sessions: CSP Community Webinars
• Microsoft Partner Community Events: Events Calendar
• Partner Center Announcements: Announcements Page

By staying connected to these resources, distributors and their resellers can anticipate changes, align early with new requirements, and avoid surprises that could impact incentive eligibility.

Final Thoughts

For distributors, FY26 brings both new challenges and significant opportunities. The alignment of incentives with MCAPS priorities creates a clear path for maximizing profitability, but it also requires rigorous execution and proactive channel management.

By focusing on high-value products, enabling reseller specializations, leveraging co-op funds, and staying closely informed, distributors can position themselves as indispensable players in Microsoft’s partner ecosystem.

Incentives are no longer just supplemental income, they are a strategic lever for growth, competitiveness, and long-term success in the cloud era. Distributors who take full advantage of FY26 opportunities will not only strengthen their own business but also empower their partner networks to thrive.