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How tax changes in the One Big Beautiful Bill Act affect technology companies

Tax reform insights for software, SaaS and AI-driven enterprises

September 02, 2025
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Technology industry Business tax Tax policy Artificial intelligence

Executive summary: Tax relief for technology companies

The One Big Beautiful Bill Act (OBBBA) contains wide-ranging tax changes that give technology companies flexibility to invest in innovation, scale infrastructure, and optimize global operations.

More favorable tax treatment of research and development (R&D) and capital investment supports development of software platforms, cloud environments, and AI-driven tools. Expanded interest deductions and gain exclusions may improve access to financing and attract earlier-stage investment into high-growth ventures.

For tech companies with international operations, changes to how foreign earnings and intangible assets are taxed could prompt reassessments of where platforms are built, IP is housed, and services are delivered. With a tax policy roadmap in place for the foreseeable future, technology executives can make more informed decisions about structuring global operations and managing the cost of innovation.

Technology companies face a combination of enhanced tax benefits and business challenges stemming from tax provisions in the OBBBA. Now that there is a federal tax policy roadmap for the foreseeable future, here is a closer look at key OBBBA tax items and their implications for technology companies.

Tax treatment of R&D expenses

The OBBBA makes domestic research and development costs fully deductible on a permanent basis, starting with 2025. Foreign R&D spending is still amortized over 15 years.

Qualified small businesses may be able to apply full expensing retroactively to accelerate deductions for expenses currently being amortized.

Learn more about the technical changes to the tax treatment of R&D expenses and the implications for businesses.

What it means for technology companies

Technology companies investing in innovative projects—such as software development, AI models, cybersecurity tools or cloud infrastructure—stand to benefit from the full deductibility of domestic R&D. Immediate expensing improves cash flow and shortens the cost recovery period for innovation, which is especially valuable for companies scaling new platforms or launching product updates.

Smaller tech firms may also benefit from retroactive expensing of previously amortized R&D costs—such as proprietary codebases, internal tools or platform integrations. These companies should revisit their R&D accounting to identify opportunities for accelerated deductions.

Bonus depreciation

The OBBBA introduces significant changes to 100% bonus depreciation, making it permanent for most property acquired after January 19, 2025, and establishing a new temporary allowance for qualified production property.

Learn more about the technical changes to bonus depreciation and implications for businesses.

What it means for technology companies

Technology companies investing in assets such as servers, networking hardware, or data center infrastructure may benefit from permanent bonus depreciation. Immediate expensing of eligible assets can reduce taxable income and improve liquidity, which is especially helpful for companies whose growth strategies center on qualifying property, such as expanding cloud capacity, building edge computing environments, or upgrading internal systems.

The temporary allowance for qualified production property may also apply to companies manufacturing devices or assembling proprietary hardware. Tech firms should assess their capital plans and consider timing purchases to maximize deductions, particularly as they scale infrastructure to support AI workloads, software as a service (SaaS) platforms, or enterprise deployments. 

AI-focused companies, which often require high-performance computing environments and specialized hardware, may find this provision especially valuable.

Business interest expense deduction limitation

The OBBBA returns to the original Tax Cuts and Jobs Act calculation for business interest expense limitations. It allows the addback for depreciation, depletion and amortization to the adjusted taxable income calculation, effectively allowing deductions up to 30% of earnings before interest, taxes, depreciation and amortization (EBITDA). This provision is permanent.

Learn more about the technical changes to the business interest expense limit under section 163(j) and the implications for businesses.

What it means for technology companies

Tech companies often rely on financing to fund growth initiatives, including acquisitions, infrastructure or expanded engineering teams. Restoring the EBITDA-based limitation allows more generous interest deductions, which can improve after-tax cash flow and make debt financing more attractive—especially for firms with substantial depreciation from equipment or facilities.

This change may support growth strategies, such as acquiring complementary technologies or entering new markets. Technology companies should revisit their financing models to assess how the expanded deduction affects their cost of capital and investment returns, particularly in competitive segments like cloud services, cybersecurity, AI platforms and enterprise software.

Exclusion of gain on the sale of qualified small business stock

The OBBBA expands the gain exclusion rules for the sale of qualified small business stock (QSBS), mainly through the following three changes applicable to QSBS issued after July 4, 2025:

  • Provides a tiered exclusion: Allows taxpayers a 50% exclusion for shares held more than three years, a 75% exclusion for shares held more than four years, and a 100% exclusion for shares held more than five years.
  • Increases per-issuer limitation: Raises the per-issuer gain exclusion cap from $10 million to $15 million (indexed for inflation) while still leaving available the 10-times-basis limit if greater.
  • Increases corporate-level gross asset threshold for qualification: Increases the gross asset threshold from $50 million to $75 million (also indexed for inflation).

Learn more about the technical changes to the exclusions for small business stock and the implications for businesses.

What it means for technology companies

The tiered gain exclusions could make tech startups more attractive to investors seeking earlier tax-advantaged exits. Investors may be more willing to back ventures with shorter development cycles, knowing they can realize meaningful tax savings on earlier exits. This may be especially relevant for companies developing SaaS platforms, developer tools, AI applications or vertical-specific software.

The increased per-issuer cap and higher asset threshold expand eligibility for tech firms that previously exceeded the limit, perhaps due to IP portfolios or infrastructure investments. Founders and executives should assess whether their corporate structure and growth plans align with QSBS eligibility, as that could enhance valuation and improve deal terms in future funding rounds or acquisitions.

U.S. international tax reforms

American competitiveness: Tax rates for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) were initially designed to encourage U.S. companies to keep intangible assets and the associated profits within the United States. Together, they aim to balance American competitiveness globally with the federal government’s need for revenue.

The OBBBA maintains those concepts but modifies FDII and GILTI by:

  • Modifying the calculations to remove exclusions based on fixed asset investment and soften expense allocation requirements
  • Slightly increasing the corresponding effective tax rates (ETRs) and changing the foreign tax credit limitation
  • Renaming to foreign-derived deduction eligible income (FDDEI) and net controlled-foreign-corporation-tested income (NCTI), respectively

Profit shifting and base erosion: The base-erosion and anti-abuse tax (BEAT) is a minimum tax designed to prevent large multinational corporations from avoiding U.S. tax liability by shifting profits abroad. The OBBBA permanently lowered the scheduled BEAT rate from 12.5% to 10.5% and eliminated the unfavorable treatment of certain credits that could be applied against regular tax liabilities after Dec. 31, 2025.

Learn more about U.S. international tax reforms in the OBBBA.

What it means for technology companies

Technology companies with global operations—especially those managing IP, cloud platforms, or distributed engineering teams—will need to reassess how the new FDDEI and NCTI rules affect their tax exposure.

The updated rules may make it more practical for technology companies to keep intellectual property and platform development in the U.S. That shift could reduce the complexity of managing international tax compliance and make it easier to claim deductions and credits tied to software, data infrastructure, and product development. For tech firms, this may lower the cost of maintaining and scaling core platforms while simplifying global tax planning.

Changes to foreign tax credit rules and slightly higher tax rates on foreign income mean tech firms should take a fresh look at how they structure international operations. For companies earning significant revenue from global subscriptions, licensing, or services, shifting IP or regional hubs back to the U.S. could lead to better after-tax results and reduced compliance complexity.

Adapting to OBBBA changes: Next steps for technology companies

OBBBA tax provisions represent significant opportunities for technology companies, but they come with eligibility rules and planning considerations. Technology companies can work with their tax advisor to align their business objectives to OBBBA changes by taking the following steps:

  • Talk to your tax advisor to assess how business tax provisions align with your business objectives, whether you are scaling cloud platforms, deploying AI models, or expanding into new markets.
  • Review your capital investment, R&D and financing plans to align with the new incentives. This includes evaluating infrastructure spending for data centers, hardware to support AI workloads, and software development pipelines.
  • In any transaction, work with an M&A specialist on either the buy- or sell-side when material attributes exist on the target’s balance sheet—such as IP portfolios, deferred R&D costs, or platform assets.
  • Model your tax position under the new rules to identify savings opportunities. Leveraging tax technology can enhance modeling precision, streamline compliance workflows, and improve visibility across capital, R&D, and international tax positions—ultimately supporting more agile and informed decision-making for technology company leaders.

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