INSIGHT

How the One Big Beautiful Bill Act reshapes the tax landscape for technology companies 

August 15, 2025

Industries: Technology

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The One Big Beautiful Bill Act (OBBBA), signed into law by President Trump on July 4, 2025, represents one of the most significant tax reforms affecting technology companies in recent years. If you’re leading a tech business, this sweeping legislation brings both substantial opportunities and new complexities that demand your immediate attention. 

The bill’s impact extends far beyond traditional tax relief. With over $1 billion in new AI investments and fundamental changes to research and development tax treatment, OBBBA signals a clear federal commitment to innovation while introducing new compliance challenges. 

Relief for R&D expenses 

One of OBBBA’s most impactful provisions directly addresses a pain point that has plagued tech companies since 2022. The requirement to capitalize and amortize research and experimentation (R&E) expenses over five years domestically—and 15 years for foreign activities—created unexpected cash flow challenges, particularly for startups and growth-stage companies. 

What changes immediately 

OBBBA permanently restores immediate deductions for domestic R&E expenses, providing the certainty your tax planning has been missing. More importantly, the legislation offers flexibility in how you handle the transition: 

• Small businesses can amend prior years’ returns to claim refunds for previously capitalized expenses 
• All taxpayers can choose to deduct unamortized costs from 2022-2024 over either one or two years 
• Software development costs are explicitly included in qualifying R&E expenses 

However, foreign R&E activities remain subject to the 15-year amortization requirement, which means your international research strategy may need adjustment. 

Strategic implications for your business 

This change fundamentally alters the cash flow dynamics of R&D investments. For companies with significant domestic research activities, the restoration of immediate expensing can free up substantial cash that was previously tied up in amortization schedules. Consider reviewing your research allocation between domestic and international operations to maximize these benefits. 

Capital investment incentives accelerate innovation 

OBBBA brings back 100% bonus depreciation permanently for qualifying property acquired and placed in service after January 19, 2025. This represents a significant reversal from the gradual phase-down that began in 2023. 

Equipment and infrastructure investments 

For tech companies investing in critical infrastructure, this provision offers immediate tax benefits for: 

• Laboratory and testing equipment 
• Manufacturing facilities and cleanroom construction 
• IT infrastructure and data center equipment 
• Specialized software development hardware 

The ability to fully deduct these investments in the year they’re placed in service can dramatically improve your cash flow and accelerate expansion plans. 

Enhanced AI funding creates new opportunities 

While OBBBA tightens some areas of tax policy, it opens significant opportunities through federal AI investments exceeding $1 billion. These investments span multiple sectors and could create substantial contract opportunities for tech companies. 

Federal AI spending breakdown 

The legislation allocates substantial funding across various AI initiatives: 

• $250 million for AI systems at U.S. Cyber Command 
• $450 million for naval AI and automation integration 
• $145 million for unmanned systems AI development 
• $250 million for broader AI ecosystem advancement 

Positioning for government contracts 

If your company develops AI solutions, cybersecurity tools, or defense-adjacent technologies, these investments represent substantial market opportunities. The federal government’s accelerated AI adoption timeline through 2029 suggests sustained demand for innovative solutions. 

The bigger picture for tech companies 

These investments signal that the federal government is becoming a major customer for AI technologies, with sustained demand through 2029. For tech companies, this means: 

1. New revenue streams: Government contracts can provide stable, long-term revenue 
2. R&D funding opportunities: Some of this money may flow through grants and research partnerships 
3. Market validation: Government adoption often leads to broader commercial acceptance 

4. Scale opportunities: Federal contracts are typically large enough to help companies scale rapidly 

The key is that these aren’t just one-time purchases—they represent a strategic shift toward AI-first government operations, suggesting sustained demand for these technologies well beyond the initial funding period. 

Interest deduction improvements for leveraged companies 

OBBBA permanently returns interest expense limitations to the more favorable EBITDA-based calculation, moving away from the restrictive EBIT standard implemented in 2022. This change primarily benefits larger tech companies with significant debt obligations. 

Impact on capital-intensive operations 

For companies relying on debt financing to fund infrastructure development, manufacturing expansion, or large-scale R&E initiatives, this modification provides meaningful relief. The inclusion of depreciation and amortization in the base calculation increases deductible interest amounts and improves after-tax cash flow. 

Regulatory compliance landscape shifts 

The legislation creates a complex regulatory environment for AI development. While OBBBA initially proposed a 10-year moratorium on state-level AI regulation, lawmakers ultimately removed this provision, leaving companies to navigate an evolving patchwork of state requirements. 

Preparing for compliance complexity 

Without federal preemption, you’ll need to monitor and comply with varying state regulations around AI ethics, privacy, and transparency. This regulatory fragmentation may increase compliance costs and complexity, particularly for companies operating across multiple states. 

FinTech relief through 1099-K adjustments 

OBBBA provides targeted relief for FinTech companies by modifying Form 1099-K reporting requirements. Starting in 2026, the legislation repeals the $600 threshold and restores the previous requirements of $20,000 and 200 transactions per payee annually. 

This rollback reduces administrative burden for payment processors, marketplaces, and peer-to-peer platforms while maintaining appropriate oversight for larger transaction volumes. 

R&D tax credits: valuable but more complex 

While R&D credits remain available and valuable for tech companies, new IRS documentation requirements significantly increase the compliance burden. You’ll need more detailed technical data and contemporaneous records to support credit claims. 

Balancing benefits with compliance costs 

For companies with substantial software development or research activities, these credits continue to provide meaningful value. However, budget for increased professional services costs to meet the heightened documentation standards. 

Strategic planning priorities for tech companies 

OBBBA’s complexity requires immediate strategic assessment across multiple areas of your business. Consider these priority actions: 

Financial and tax planning review 

• Evaluate the cash flow impact of restored R&E deductibility 
• Assess capital expenditure timing to maximize bonus depreciation benefits 
• Review international structure efficiency under new GILTI provisions 
• Model the effects of enhanced interest deductibility on financing decisions 

Operational adjustments 

• Align internal processes with evolving R&D credit documentation requirements 
• Develop state-by-state AI compliance monitoring procedures 
• Assess government contracting opportunities in AI and cybersecurity sectors 
• Review FinTech reporting obligations under modified 1099-K rules 

Long-term strategic considerations 

The legislation’s timeline extends through 2029, particularly for AI-related investments and infrastructure development. Your strategic planning should account for this extended implementation period and the sustained federal commitment to innovation it represents. 

Moving forward with confidence 

The One Big Beautiful Bill Act fundamentally reshapes the tax and regulatory landscape for technology companies. While the legislation provides substantial opportunities for tax savings and business growth, it also introduces new complexities that require careful navigation. 

The key to maximizing OBBBA’s benefits while managing its challenges lies in proactive planning and strategic implementation. By addressing these changes systematically, you can position your company to thrive in this new environment. 

Ready to develop a comprehensive strategy? Our tax and advisory professionals can help you evaluate opportunities, manage compliance requirements, and optimize your approach to this complex legislation. Contact BPM today to discuss how these changes affect your specific situation and develop an action plan tailored to your business needs.