The following is a guest post from Ian Boccaccio, principal and income tax practice leader at Ryan. Opinions are the author’s own.
The One Big Beautiful Bill Act has delivered meaningful new opportunities for businesses, including 100% bonus depreciation, the restoration of immediate expensing for domestic R&D and permanent credit transferability. For companies that can act quickly and precisely, the potential for tax savings and improved cash flow is substantial. But the same provisions that create those opportunities are generating a new layer of operational complexity that many corporate tax departments are not yet equipped to handle.
Teams that cannot model the full scope of OBBBA’s impact will find themselves not just stretched thin but at risk of missing benefits that require deliberate action to capture.
What is at stake
Before OBBBA, domestic R&D costs were amortized over five years, bonus depreciation was phasing down and credit transferability remained an evolving planning tool. OBBBA resets several of those conditions. Bonus depreciation returns to 100% for qualifying property placed in service after January 19, 2025. Section 174A restores full immediate expensing for domestic research and experimental expenditures. Credit transferability is now a permanent fixture, and buying discounted tax credits has become an annual exercise for most U.S. corporates. Companies purchasing $100 million in credits can realize $5 million to $9 million in cash savings.
At the same time, the bill introduces new planning tensions. Additional interest expense deductions available under OBBBA could create a Base Erosion and Anti-Abuse Tax liability for certain multinationals. Bonus depreciation can reduce taxable income in ways that limit a taxpayer’s ability to benefit from the Foreign-Derived Intangible Income deduction. These interactions need to be modeled before returns are filed.
The state conformity problem
Federal changes do not automatically flow through to state returns, and OBBBA is creating significant state-level turbulence across three core areas: GILTI, 174A and depreciation.
Roughly half of states conform to the Internal Revenue Code on a rolling basis; the other half conform to an older version or selectively adopt provisions. OBBBA was enacted just as most state legislative sessions ended, meaning a majority of state-level responses will not materialize until well into 2026. This pattern is familiar: After TCJA, state adoption and decoupling dragged on for up to nine years, with California acting as recently as last June, one month before OBBBA was enacted. Tax preparation software and compliance matrices often lag those changes, so teams cannot assume their systems will capture the current state of the law.
States have also demonstrated a willingness to interpret federal IRC provisions in ways that directly contradict federal positions. Colorado, for example, has, through case law, disconnected from federal LLC classification for purposes of the state’s 80/20 test for excluding domestic corporations with significant foreign factor representation. New Jersey case law previously held that NOL carryovers could be time-barred from change before legislation reversed that position. These kinds of independent state interpretations compound the complexity of an already unsettled conformity landscape.
On GILTI, approximately 12 states currently tax some portion of this income, and that number is growing, with Illinois and Minnesota among recent additions and Massachusetts actively considering legislation. The renaming of GILTI to Net CFC Tested Income under the new law creates a technical problem for states that referenced “GILTI” by name in their statutes. Some states allow the IRC Section 250 deduction related to GILTI, and those states will need to update their statutory language to avoid potential interpretation problems. Illinois has already updated its statute to account for the naming change.
On 174A, several states have already decoupled from the immediate expensing provision, citing revenue shortfalls. States that want to preserve maximum capitalization of research costs need to reference 174A specifically in their decoupling provisions without disturbing treatment under the existing Section 174. Conflating the two creates compliance risk. The less favorable federal treatment of foreign research costs, amortized over 15 years rather than immediately expensed, also creates a constitutional tension at the state level under Kraft, which prohibits states from discriminating against foreign commerce.
On depreciation, many states cannot afford to be as generous as the federal government in allowing accelerated deductions. Even so, even in states that have decoupled from existing bonus depreciation statutes, taxpayers may still have a viable path to claiming accelerated depreciation under IRC Section 168(n), since it is an entirely new section under the code rather than an amendment to existing rules. Whether a state’s decoupling language captures a newly created section is a question teams should be asking now. Iowa and Oklahoma have administratively moved to include Net CFC Tested Income in their state tax base following the naming change, adding further complexity for multinationals with filing obligations in those states.
What tax teams should do now
Staying abreast of state law changes and ensuring those changes flow through the return is the most important discipline tax teams can adopt right now. That requires a manual review of state-by-state conformity status rather than reliance on software updates alone.
On GILTI and Net CFC Tested Income, companies that have not yet challenged states’ ability to tax this income should examine the incremental state tax exposure under the OBBBA version of the provision and consider filing claims in affected jurisdictions. The wave of states moving to tax this income is growing, and companies that act proactively rather than waiting for an audit will be better positioned. Similarly, companies should consider taking protective positions on original returns challenging states’ ability to apply the less favorable federal treatment of foreign research costs under Section 174, given the constitutional constraints under Kraft.
For companies with remaining R&D amortization balances, the acceleration election available in 2025 and 2026 is time-sensitive. Weighing that option against the amended return path requires a case-by-case analysis that accounts for filing costs, IRS processing delays and the cascading effect on state returns.
Setting clear expectations with the C-suite matters as much as the technical work. Finance leaders should understand that OBBBA’s benefits are not automatic and that the window to act on several provisions is narrowing.
OBBBA represents a genuine opportunity for businesses willing to engage with its complexity. The most time-sensitive provisions are those tied to bonus depreciation elections, the 174A acceleration window and the Section 168(n) question at the state level. The companies that capture the most value will be those that treat OBBBA as an ongoing planning discipline, tracking state developments in real time and modeling provision interactions carefully.
