The One Big Beautiful Bill Act (OBBB), signed on July 4, 2025, introduces sweeping federal tax changes that directly reshape the financial landscape for technology companies. By rolling back several 2017 tax reform limits and adding new incentives, OBBB affects how tech firms approach R&D deductions, asset depreciation, interest expense planning, small‑business stock gains, and state‑level tax filings.

To help tech leaders understand what matters most, here are the five key OBBB changes that should be top of mind:

1. Restored R&D Deductibility (Section 174)

The OBBB restores immediate expensing of domestic R&D for technology companies beginning in 2025, reversing the prior five‑year amortization requirement and significantly reducing the after‑tax cost of U.S. development work. Tech businesses also receive retroactive relief for 2022–2024, allowing small firms to amend returns and larger companies to take a 2025 catch‑up deduction. Foreign R&D must still be amortized over 15 years, requiring ongoing cost tracking. State conformity varies, meaning many tech companies will need dual federal‑versus‑state R&D calculations and should leverage available state R&D credits to offset added tax burdens.

Get ahead of Section 174 requirements – explore strategies(Opens a new window) to protect cash flow and stay compliant.

2. 100% Bonus Depreciation Returns (Section 168(k))

The restoration of 100% bonus depreciation allows tech companies to immediately expense qualifying equipment, computers, and certain software placed in service after Jan. 19, 2025. This accelerates cash savings and enables faster reinvestment into hardware‑heavy innovation needs, such as infrastructure, compute capacity, and development environments. Tech firms must weigh full expensing against potential impacts on interest‑deduction limits and NOL creation, especially in highly leveraged or loss‑position scenarios. Because many states do not conform to federal bonus rules, technology companies should also plan for state‑level addbacks and maintain separate depreciation schedules when modeling tax outcomes.

Understand how the IRS’s interim guidance may impact your bonus depreciation strategy – read the latest insights(Opens a new window).

3. Business Interest Deduction Limit Eased (Section 163(j))

The shift back to an EBITDA‑based interest‑deduction limit significantly benefits tech companies, especially those that are asset‑heavy or invest heavily in R&D, because depreciation and amortization no longer reduce the amount of interest they can deduct. As a result, many tech firms – particularly those leveraging debt to fund growth, infrastructure, or large R&D programs – will now be able to deduct most or all of their interest expenses.

Prior‑year disallowed interest can also be used more quickly beginning in 2025 due to a higher limitation that would not only allow companies to deduct their current year interest but also, because of the increase to adjusted taxable income, potentially allow a deduction for some, if not all their prior year disallowed interest, lowering tax income, lowering the corresponding tax and improving cash flow.

4. Expanded QSBS Exclusion for Investors (Section 1202)

The expanded QSBS rules significantly enhance tax benefits for founders, early employees, and investors in tech startups by increasing the gain exclusion cap to $15 million per taxpayer and introducing partial exclusions for three and four-year holding periods. More tech companies now qualify as “small businesses” eligible to issue QSBS‑qualified stock because the asset threshold rises from $50 million to $75 million, extending eligibility to more mid‑ and late‑stage startups. These changes strengthen incentives to operate as a C‑corp, encourage early option exercise, and make earlier exits more feasible while still preserving substantial tax savings. Although these enhancements greatly reduce federal tax on successful tech exits, most states do not conform, so founders and investors must plan carefully for state‑level taxation and documentation requirements.

Learn how(Opens a new window) the QSBS exclusion works and why it may offer a rare tax advantage for founders and investors.

5. State-Level Decoupling and Planning

State‑level responses to OBBB create a widening gap between federal and state tax rules, meaning tech companies must now navigate inconsistent treatment of R&D expensing, bonus depreciation, interest limitations, and QSBS across jurisdictions. While some states will conform to the new federal rules, many – such as Maryland – have already chosen to decouple from provisions like R&D expensing or the EBITDA‑based interest‑limitation change, requiring continued amortization or stricter interest caps for state purposes. Most states also refuse to follow federal 100% bonus depreciation and QSBS exclusions, forcing tech companies to maintain separate state schedules and expect materially higher state taxable income. As a result, tech firms must closely track each state’s approach and model multi‑jurisdictional impacts to avoid underpayment risks and optimize tax outcomes.

See how your state is responding to the OBBB tax law — explore key conformity developments(Opens a new window).

A New Era of Tax Advantages for Tech Companies

OBBB delivers broad tax relief for tech companies by restoring immediate R&D and capital investment deductions, easing interest‑expense limits, and expanding QSBS incentives. These changes substantially reduce federal tax liability, creating more room for reinvestment and growth. To maximize benefits, tech firms should adjust accounting methods, plan asset purchases strategically, evaluate QSBS‑friendly structures, and stay alert to state‑level deviations that may require separate treatment. With proactive planning, tech CFOs can meaningfully lower their tax burden while navigating the varied state rules that remain critical to overall tax outcomes.