SUMMARY:
The recently passed One Big Beautiful Bill Act (OBBB) aims to reshape the U.S. economic landscape and stimulate domestic investment in technology by restoring key tax incentives, including the immediate expensing of qualified domestic research and development (R&D) costs and 100% bonus depreciation, which businesses can maximize by partnering with technology firms like XTIVIA for strategic alignment and accelerated project execution.
- The OBBB reverses a 2022 change by restoring immediate expensing for domestic R&D costs for tax years beginning after December 31, 2024, allowing companies to deduct 100% of qualified spending in the year incurred.
- The bill permanently reinstates 100% bonus depreciation for eligible business property acquired after January 19, 2025, thereby encouraging significant capital expenditures and investment in new equipment and technology.
- The OBBB also permanently extends the 20% Qualified Business Income (QBI) deduction, which is beneficial for pass-through entities, including many small tech businesses and startups.
- Firms like XTIVIA assist businesses in capitalizing on these provisions through services such as strategic technology roadmapping, optimizing capital expenditures, and accelerating R&D initiatives to maximize tax advantages.
To optimize future performance, companies can transform the OBBB’s tax incentives into a powerful engine for growth and innovation by making strategic, tax-advantaged technology investments today.
Table of contents
The recently passed “One Big Beautiful Bill Act” (OBBB) aims to reshape the U.S. economic landscape, and its tax provisions are set to have a significant impact on companies investing in technology. The measures designed to incentivize domestic innovation and manufacturing in the tax code should be a significant consideration for US-based businesses.
Key Incentives for Tech Development:
One of the most notable changes for technology companies is the restoration of immediate expensing for domestic research and development (R&D) costs. For decades, companies could deduct 100% of their qualified R&D spending in the year incurred. However, a 2022 change required these costs to be amortized over five years (or 15 for foreign R&D), a move widely criticized for stifling innovation. The OBBB reverses this, allowing businesses to immediately deduct these expenses or choose to amortize them over a useful life of at least 60 months for tax years beginning after December 31, 2024. This change is particularly beneficial for R&D-intensive industries like tech, as it frees up capital for further investment and product development.
Beyond R&D, the OBBB also reinstates 100% “bonus depreciation” for eligible business property acquired after January 19, 2025, on a permanent basis. This allows companies to immediately deduct the full cost of qualifying assets, encouraging capital expenditures and investments in new equipment and technology. The bill also permanently extends the 20% Qualified Business Income (QBI) deduction for pass-through entities, which includes many small tech businesses and startups.
Overall Outlook:
The “Big Beautiful Bill” represents a complex overhaul of the U.S. tax code with a clear emphasis on stimulating domestic investment in key strategic areas like R&D.
For companies to take full advantage of all the benefits in the new bill, they can leverage technology firms to accelerate investments and de-risk technology projects. There are key advantages in making this part of your execution strategy, such as:
- Access to Specialized Expertise and Experience
- Cost Efficiency and Predictability
- Improved Efficiency and Productivity
- Scalability and Flexibility
- Enhanced Cybersecurity and Risk Mitigation
In essence, an IT professional services firm provides businesses with a strategic partner that can unlock the full potential of technology, mitigate risks, and allow the business to concentrate on what it does best. Leveraging an IT Professional Services Firm to leverage the favorable tax provisions in the OBBB, Companies can optimize their future performance by making tax-advantaged investments today.
XTIVIA: Your Partner in Leveraging the Big Beautiful Bill for Innovation
XTIVIA, with its decades of experience and deep expertise in a wide array of technology services, is uniquely positioned to help businesses capitalize on the favorable provisions of the “Big Beautiful Bill.” We understand the nuances of the new tax incentives, particularly those related to R&D and capital expenditures, and can guide your organization in making strategic technology investments that maximize these benefits.
Here’s How XTIVIA can assist:
- Strategic Technology Roadmapping aligned with OBBB: We work with you to develop technology strategies that not only drive innovation but also align with the tax incentives offered by the OBBB. This includes identifying eligible R&D projects for immediate expensing and planning for capital expenditures that qualify for 100% bonus depreciation.
- Accelerated R&D Initiatives: Our expertise in custom software development, AI/ML integration, and cloud-native application development directly supports R&D-intensive projects. By partnering with XTIVIA, you can accelerate your innovation cycles, leveraging the immediate expensing of domestic R&D costs to reinvest savings into further development.
- Optimizing Capital Expenditures: XTIVIA assists in implementing new equipment and technology solutions that qualify for bonus depreciation. Whether it’s upgrading your infrastructure, adopting new enterprise software, or investing in advanced data analytics platforms, we ensure your capital investments are strategically planned to maximize tax advantages.
- Enhanced Business Efficiency and Productivity: Through services like enterprise application integration, legacy system modernization, and comprehensive managed services, XTIVIA helps businesses achieve improved efficiency and productivity. These improvements not only reduce operational costs but also free up resources that can be redirected towards tax-advantaged innovation efforts.
- Risk Mitigation and Compliance: Navigating complex tax codes and technology implementations can be challenging. XTIVIA provides robust cybersecurity solutions and project management expertise to de-risk your technology initiatives, ensuring compliance and safeguarding your investments.
- Scalable and Flexible Solutions: As your business grows and adapts to market demands, XTIVIA offers scalable cloud and DevOps solutions, allowing you to optimize your technology footprint and leverage new opportunities without significant upfront capital strains, further enhancing your ability to benefit from the OBBB’s provisions.
By partnering with XTIVIA, businesses can transform the OBBB’s tax incentives into a powerful engine for growth and innovation, optimizing their financial performance while driving their technological advancement.