After months of committee rewrites and inter‑chamber brinkmanship, late-stage conference trimming, and vigorous floor debate, the One Big Beautiful Bill Act (OBBB) crossed the finish line on Independence Day 2025 with the President’s signature. The measure delivers the most consequential business‑tax reset since the Tax Cuts and Jobs Act of 2017. It restores immediate deductions, widens gain exclusions, and gives investors a permanent runway to recycle capital into high‑need communities.
For finance chiefs, the timing is fortuitous. Balance sheets are feeling the weight of higher interest rates, supply‑chain reinvestment remains capital‑intensive, and the global minimum‑tax regime is squeezing margins abroad. OBBB tilts the scale back toward the United States by pairing full expensing with richer innovation incentives and an evergreen Opportunity Zone map.
This briefing distills the four centerpieces (bonus depreciation, R&D expensing, Qualified Small Business Stock (QSBS), and Opportunity Zones (OZs)) into concrete playbooks. Each section closes with federal, state‑and‑local, and international angles so your team can quantify the total benefit before year‑end.
| Incentive | What Changed | Why It Matters |
|---|---|---|
| Bonus Depreciation | Full first‑year expensing is now permanent for most equipment, software, and qualified improvement property placed in service after January 19 2025. | Pulls deductions forward, boosts free cash flow, and sweetens hurdle rates on cap‑ex. |
| R&D Expensing | Domestic research costs regain full deductibility beginning 2025. Firms can retro‐expense 2022‑24 costs; those averaging ≤ $31 million in receipts may use short‑form amended returns for cash refunds. | Unlocks refunds and pairs with the R&D credit for a double benefit—but triggers tougher substantiation hurdles. |
| QSBS | Section 1202 exclusion is now 50 percent after 3 years, 75 percent after 4, and 100 percent after 5. Size limits rise to $15 million in capital and $75 million in gross assets. | More founders, employees, and early investors can shelter exits, even on earlier timelines. |
| Opportunity Zones | The program becomes permanent. Post‑2026 gains deferred five years, followed by a 10 percent basis step‑up (30 percent for rural funds). Appreciation in the fund escapes tax after a 10‑year hold. | Creates a standing playbook for rolling many kinds of gains (stock, real estate, business sales) into tax‑advantaged deals. |
What happened: The phase‑down is repealed. Assets with a recovery period of 20 years or less, including qualified improvement property, now qualify for a 100 percent write‑off in the year they are placed in service.
Planning moves for CFOs:
Bonus or §179: how to decide: Bonus depreciation has no dollar cap, and it can generate or enlarge an NOL, making it the better pick for large purchases or when sheltering one‑time gains. Section 179 is elective, asset‑by‑asset, and limited to current‑year business income, so it is ideal for smoothing deductions over several years or for assets bonus does not cover.
Federal vs. SALT: Many states—including California, New York, New Jersey, Massachusetts, and North Carolina—add back federal bonus depreciation but allow §179. California still caps §179 at $25,000; most other states follow the full federal limits. A blended strategy, using bonus where accepted and §179 elsewhere, often yields the lowest nationwide cash tax.
International: Inbound equipment and facility build‑outs qualify once placed in U.S. service, letting foreign parents benefit from the immediate write‑off. Coordinate customs valuation and Pillar Two effective tax‑rate tests. Align FDII claims to maximise the advantage. Assets kept abroad receive no bonus, so shifting contract manufacturing or IP‑driven production to U.S. soil can unlock the deduction.
What happened: Domestic §174 costs again qualify for a current deduction starting with 2025 tax years. Two paths unlock 2022‑24 costs:
Planning moves for CFOs:
Federal vs. SALT: Only 18 states automatically adopt the new expensing; roughly half still require §174 capitalization or separate add‑backs. Credit regimes vary just as widely—some piggy‑back on the federal base, others (e.g., Virginia, Tennessee) cap annual awards or disallow wage portions now deducted federally. Build a state‑by‑state matrix before filing the catch‑up and consider shifting qualified payroll to high‑credit, conforming jurisdictions.
International: Foreign research still amortizes over 15 years, so cross‑border groups may pivot projects stateside or adjust cost‑sharing arrangements to capture the immediate deduction. Watch §59A BEAT and Pillar Two, which can dilute savings when service‑fee mark‑ups shift income offshore. Robust TP documentation helps sustain deductions and credits in both jurisdictions.
What happened: Investors and employees can exit sooner yet still shield a majority of gain. The 50 / 75 / 100 percent ladder kicks in at three, four, and five years, while higher asset thresholds keep more mid‑market tech and life‑science companies in play.
Capital‑gain game plan:
Federal vs. SALT: Conformity is a patchwork. California and New Jersey tax the entire gain, New York allows the exclusion but not for city tax, and Pennsylvania caps its benefit at $100 k per taxpayer. Evaluate residency shifts, non‑resident trusts, or upstream C‑corp blockers at least a year before exit to cut effective state rates.
International: Non‑U.S. holders generally remain taxable on QSBS gains, with limited treaty relief. Consider treaty‑jurisdiction blockers, into‑treaty mergers, or timing disposals after expatriation to soften exposure. Real‑property‑rich corporations can trigger FIRPTA look‑through, so assess CFC, PFIC, and residency footprints well before exit.
What happened: The 2026 cliff disappears. Gains realized after December 31 2026 and reinvested within 180 days defer for five years, then receive a 10 percent basis step‑up—or 30 percent for rural funds. Appreciation inside the Qualified Opportunity Fund escapes tax if the investor holds at least 10 years, and depreciation recapture is wiped away.
Practical use cases
Capital‑gain game plan:
Federal vs. SALT: Nine states—including California, Massachusetts, Mississippi, and New Jersey—ignore OZ deferral and exclusion, while others provide supplemental breaks such as North Carolina’s 15 percent basis boost. Compare after‑tax IRRs jurisdiction‑by‑jurisdiction and weigh entity‑level and property‑tax incentives offered by host municipalities.
International: Foreign investors can secure the 10‑year appreciation exclusion by investing through a U.S. partnership or corporate blocker, yet withholding taxes still apply to interim income and certain dispositions. Structuring via a treaty‑favored jurisdiction or REIT blocker can trim dividend, interest, and FIRPTA withholding. Home‑country currency rules may tax repatriated capital gains. Model the net return.
OBBB reshapes the tax landscape in ways that favor cash preservation, capital deployment, and strategic exits. Companies that act quickly will lock in lower effective tax rates while competitors wait for regulations to catch up.
Next Steps:
Sapowith Tax Advisory is already running tailored scenarios for clients in tech, life sciences, manufacturing, and real estate. Let’s turn OBBB’s promise into real‑world cash savings and stronger valuations.
This article is for general information only; it is not tax, legal, or accounting advice. Reading it does not create a client relationship with Sapowith Tax Advisory. Consult your own qualified advisers before acting on any information contained here. Sapowith Tax Advisory disclaims all liability for actions taken, or not taken, based on this content.