Rebecca Lester, senior fellow and associate professor of accounting at Stanford University, says tax provisions for R&D in the One Big Beautiful Bill will benefit smaller, research-intensive tech companies.
Buried inside the One Big Beautiful Bill Act that President Donald Trump signed into law earlier this month is a wonky tax change that could be boost for the tech industry.
Back in 2017, when the first Trump tax cuts passed, they included a provision to change how firms were allowed to deduct research and development costs. Instead of deducting them all at once when a company made an investment, those deductions had to be spread out over five years starting in 2022, which made R&D more expensive, says Rebecca Lester, who teaches accounting at Stanford.
She recently co-authored a study showing the 2022 change led to reductions in R&D spending and employment that could have contributed to the slowdown in the tech industry starting in late 2022. That provision, though, has now been reversed in the new tax law.
“‘Big Beautiful Bill Act’ proposes restoring full R&D expensing for 2025-2029” from R&D World
“Bad breaks: Why US tax policies put innovation at risk” from Stanford University
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