The One Big Beautiful Act (OBBA) 2025 is a game-changer for US startups. From expanded R&D tax credits to updated rules on Qualified Small Business Stock (QSBS) and equity compensation deferrals, the new law delivers powerful incentives to cut tax bills and boost growth.
If you're a US startup in tech, biotech, or services, now’s the time to align your tax strategy.
Bigger R&D Tax Credits
- Startups can now claim up to $1 million in R&D payroll tax credits, double the old cap.
- Plus, OBBA restores 100% immediate expensing of US R&D from 2025 onward.
For 2022–2024: Amend past returns, or catch up all deductions in 2025/2026
Only US-based R&D qualifies; foreign expenses still amortize.
Why it matters:
- Enhanced cash flow, important for capital intensive startups (tech/life sciences).
- Helps capital-intensive startups in tech, biotech, and product
- Retroactive refunds offset pandemic-era tax burdens
QSBS Capital Gains (Qualified Small Business Stock)
OBBA preserves 100% tax-free capital gains for QSBS held 5+ years (IRC §1202)
Major enhancements:
- Asset cap raised: $50M → $75M (Widening eligibility for larger startups)
- Exclusion cap: $10M → $15M (or 10× basis)
- New tiered holding periods:
- 3years → 50% exclusion
- 4years → 75%
- 5+years → 100%
Why it matters:
- Founders & early employees can exit sooner with partial benefits
- More Series A/B startups qualify for QSBS
- Enables secondary sales before the 5-year mark with meaningful tax breaks
Tax Deferral on Equity Comp
Startups can now defer tax on equity (stock options, RSUs) for up to 7 years or until a liquidity event(e.g., IPOs) from vesting/exercise. (whichever is earlier)
RSUs – before:
- Taxed at vesting as ordinary income, even if you don’t sell the stock
- Value at vesting = treated as wages → income tax + payroll tax
- If§83(i) is elected: Tax deferral for up to 5 years from vesting/exercise
- Must elect within 30 days of vesting
Why it matters:
Talent retention, no early tax burden & encourages long-term alignment
Bonus Depreciation Returns
Startups can now deduct up to 100% ofqualified asset costs immediately, in the year they’re placed in service, instead of over 5–7 years.
Applies to: Equipment, software & machinery
Before: Depreciation had to be spread over 5-7 years
Now:
- Deduct most or all in year one
- Ideal for asset-heavy, early-stage companies
Why it matters:
- Boosts early cash flow
- Reduces taxable income when it matters most
The One Big Beautiful Act is more than a tax update, it’s a strategic edge for US startups.
Startups, it’s time to realign your tax strategy.
Reach out to FinStackk, we help startups make smarter decisions.