Tax policy is influencing capital allocation, but leadership judgment still decides outcomes.
Key takeaways
The biggest OBBBA opportunity may be reallocating capital, not reducing tax expense.
Competitive advantage comes from modeling trade-offs, not maximizing individual tax benefits.
How the OBBBA changes middle market business decisions
Middle market companies are operating in a business environment that has become significantly more complex over the last 15 years—forcing executives to continually grapple with how to allocate capital across competing priorities, including technology, innovation, operations and growth. As capital costs have risen, those spending decisions have become more consequential.
Since Congress enacted the One Big Beautiful Bill Act (OBBBA) in July 2025, middle market executives have had another set of variables to consider: the law’s business tax incentives. Those provisions influence the after-tax economics of decisions involving capital investment, financing, research, transactions, workforce planning and global operations.
C-suite leaders can evaluate how the law may affect several decisions executives already face:
Whether a capital investment moves forward now or later may be influenced by changes in depreciation timing.
Whether a research and development project clears the required return threshold may be affected by changes in the tax treatment of research costs.
How to finance growth may be influenced by changes that improve the tax benefits associated with borrowing.
As businesses evaluate those investment, financing and operating choices, tax planning is becoming more closely integrated with broader capital allocation decisions. Capturing value often requires leaders across the organization to assess after-tax outcomes before committing capital.
The range of potential outcomes may help explain why the middle market's outlook on the OBBBA is not uniform.
Key findings of the RSM MMBI survey on OBBBA response
51%
of executives familiar with the OBBBA expect it to have a positive effect on their organization’s future growth.
89%
of executives familiar with the OBBBA planned to increase capital investment over the next 12 months because of the OBBBA.
58%
of capital investment increases over the next three years due to immediate expensing provisions will result from accelerated planned investments rather than newly conceived investments.
77%
of executives who expect the OBBBA will positively affect their business are considering new investments in AI because of the law.
In RSM's Q2 2026 Middle Market Business Index (MMBI) survey of 500 senior executives, a slim majority of respondents familiar with the law said they expect it will have a positive effect on future growth and after-tax cash flow, while roughly one in five said they expect the law will reduce future growth and after-tax cash flow. Optimism generally increased with company size within the middle market.
"The impact of the OBBBA is likely peaking in the third quarter of 2026," says Joe Brusuelas, RSM US chief economist. “Business leaders are evaluating the law in an environment shaped by geopolitical disruption and other economic shocks that are also influencing investment and capital allocation decisions."
Different companies across the middle market are approaching post-OBBBA spending decisions from different economic positions. Some have stronger balance sheets, larger investment pipelines or greater access to capital, while others focus on preserving financial flexibility and improving performance. Tax policy may influence capital spending decisions, but the opportunities available to each company vary considerably.
“Tax policy is often intended to shape economic behavior, not simply to reduce or increase taxes,” says Jim Alex, RSM principal and the firm’s U.S. public policy and government affairs leader. “The survey results suggest companies are evaluating the OBBBA through the lens of their own business priorities, which is consistent with how incentives-based policy is intended to work: creating opportunities for investment and growth while allowing businesses to decide which opportunities make the most sense for their circumstances and goals.”
The law may improve the economics of certain choices, but its effect ultimately depends on how leadership teams allocate capital across competing priorities.
The OBBBA influences capital allocation across the business
The survey shows significant interest in applying the OBBBA benefits across a wide range of business priorities, although no single initiative clearly dominates.
Executives who expect the law to have a strong or moderate effect on their organization identified potential actions across nearly every major category of capital allocation, including investment, balance sheet management, workforce strategy, innovation, mergers and acquisitions and entity structure.
That breadth is a notable finding: Rather than treating the OBBBA as a provision-specific planning exercise, executives are weighing the value of tax benefits across competing uses of capital.
“The businesses seeing the greatest opportunity are looking at these provisions together rather than one at a time,” says Matt Talcoff, RSM partner and leader of the firm’s Washington National Tax practice. “They’re evaluating how changes to investment incentives, financing and entity structure affect the business as a whole and what those changes mean for cash flow, investment capacity and long-term value.”
Tax incentives create options. Leaders set priorities
The OBBBA may create opportunities, but it does not eliminate trade-offs. Business leaders still must determine which opportunities deserve capital, management attention and organizational capacity.
Many of those decisions are interconnected. A company evaluating an acquisition may also revisit its financing strategy and legal structure. A company planning additional investment in innovation might also reconsider workforce needs, technology requirements and operating capacity.
Tax outcomes—and in particular, savings—can change the economics of those decisions.
"We see companies calculating the new after-tax rate of return on investments,” says Mark Gay, RSM partner and industrials tax leader. “Projects that didn't meet the return thresholds before the OBBBA was enacted are being greenlit, while others are moving forward sooner than planned.”
Leadership teams still have to weigh each opportunity against other demands on capital and the organization’s capacity to execute.
Capital allocation still requires a business case
Improved after-tax economics are only one factor in determining where a project fits within a capital plan, and may not be the most important.
“Companies also have to consider how they operate the business,” says Gay. “Questions about customers, suppliers, capacity and execution often have just as much influence on whether an investment moves forward.”
That is the leadership discipline the OBBBA demands: identifying where tax policy changes the economics of a decision, then determining which opportunities warrant capital alongside the organization's other strategic priorities.
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