By Shazia Tabasum
Signed into law on July 4, the U.S.’ One Big Beautiful Bill Act is a reconciliation package intended to reshape business taxation — and there are opportunities for founders to achieve fresh momentum.
Several specific provisions deserve special attention: immediate domestic R&D expensing, a revamped Qualified Small Business Stock, or QSBS, framework with earlier exits, and reinstated bonus depreciation.
Here’s what’s new, as well as how startups can make the most of these developments.
Innovation gets immediate relief with R&D expensing
A longstanding issue with Section 174, where businesses had to amortize R&D costs over multiple years, is now history for startups. Effective starting in the 2025 tax year, U.S.-based R&D expenses are fully deductible as soon as they’re spent. That’s a win for tech-driven startups looking to reinvest aggressively in product development.
And even better, startups with less than $31 million in average annual gross receipts may elect to apply this change retroactively. This means 2022-2024 tax returns can be amended, which potentially unlocks refunds.
Actions for founders to take now include:
- Inventorying R&D expenditures by year to determine if amending earlier returns is worth it.
- Planning for accelerated deduction strategies — either by amending or applying expensing in 2025-2026.
- Preparing for IRS guidance around elections and technical filing details.
Early exits just got more attractive in the QSBS overhaul
The QSBS program just became friendlier to founders by:
- Raising the gross asset cap from $50 million to $75 million, expanding eligibility.
- Offering new tiered capital-gains exclusions: 50% exclusion for stock held at least three years, 75% for stock held at least four years, and the full 100% for stock held at least five years.
- Increasing the gains exclusion to $15 million per issuer (up from $10 million) or up to 10x your basis.
This is important, as founders and early employees will face less pressure to wait the full five years before cashing out. The move has already sparked interest (particularly in fast-moving sectors like AI) around earlier M&A opportunities and secondary transactions, as well as liquidity events.
Action steps for founders:
- Monitor your company’s gross asset level to stay within the $75 million threshold.
- Educate your employees, investors and potential acquirers about tiered QSBS benefits.
- Consider restructuring exit timelines to leverage partial exclusions.
Evaluate the implications of Simple Agreement for Future Equity, SAFE, options, and equity conversion timelines, noting the current rules lack clarity around SAFE-treated stock.
Bonus depreciation reinstated to ignite capital investment value
Here’s the great news for hardware-heavy, capital-intensive startups. With this change, 100% bonus depreciation is back and permanent for qualifying tangible property. It applies to property placed in service after Jan. 19, 2025, and includes everything from equipment and machinery to specific production property.
This shifts capital purchases from long-term depreciation schedules into immediate write-offs — freeing up critical cash flow to put back into the business.
Take action by:
- Accelerating the procurement of qualifying equipment slated for deployment.
- Considering lease vs. buy scenarios, as buying may carry greater upfront tax advantages.
- Consulting your tax adviser to coordinate capex planning with bonus depreciation timelines.
Putting the new law to work requires proactive planning and expert guidance. Start by auditing your R&D ledger, revisiting exit strategies and locking in accelerated tax breaks. But to truly stay on top of regulatory details, with IRS and tax guidance still emerging, engage help to keep an eye on deadlines, definitional clarity and depreciation rules. Also keep the broader landscape in mind.
This act marks a wave of entrepreneur-friendly tax reform, and timing is ideal for nimble startups to save big and reap benefits — but as always, legislation is only as valuable as your strategy. Make sure to pair new policy with smart planning and early alignment.
Speak with your adviser today and you’ll be well-positioned to turn these provisions into founder fuel.
Shazia Tabasum is a senior income tax manager at Burkland, an agency providing outsourced CFOs, accountants, tax advisers and HR professionals for fast-growing startups. She has more than 15 years of experience in U.S. corporate income taxation, working with both the Big Four and U.S. CPA firms, is licensed as an enrolled agent, and has represented clients before the IRS. Tabasum holds a bachelor’s degree in management accounting and advanced financial accounting from Bangalore University in India.
Illustration: Dom Guzman
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