The Big Beautiful Bill and What It Means for Startups
What if your next exit could be 50% bigger, 2 years faster, and (mostly) tax-free?
Ummmm, yes please!
ICYMI (you probably didn’t tho), the One Big Beautiful Bill (OBBB) Act dropped over the summer with some great updates for startups!
Yes, you still have to build an awesome company but many of these provisions:
Help you increase cash flow
Offer more financial upside at an exit
You’re already working hard!
Work smart too!
And don’t worry — this is not a boring tax explainer. This is the real talk on what actually matters for startups, distilled beautifully by Meredith Kowal at Aprio (huge thanks to her for laying out the main points 🙌).
I attached their one page summary below that has fewer jokes but has been reviewed by very professional and smart people.
Hopefully this goes without saying but I’m just a gal with a startup blog.
ALWAYS talk to a real tax professional (ahem, Meredith, ahem) before overhauling your financial strategy.
Fun Fact: Infinite Giving published a great read on OBBB for non-profits last week! Great minds think alike. 😉
1. Bigger, Faster Exits (QSBS Gets Better)
The crown jewel: Qualified Small Business Stock (QSBS).
Exclusion cap jumped from $10M to $15M.
Holding period shortened to a tiered 3/4/5 years.
Translation?
Founders, employees, and investors can see faster, larger tax-free exits.
Equity comp is (even) more attractive.
You could have a great liquidity event in 3 or 4 years, you don’t have to wait for that magic 5-year mark anymore.
2. More Cash Flow for Builders (R&D Expensing)
Have you ever amortized domestic R&D costs? Yeah, me neither. But finance and tax folks remember the pain!
Now, thanks to OBBB:
You can immediately expense R&D again.
Even better: you can apply it retroactively to prior years.
Translation?
MORE cash flow and more fuel for things like hiring and building!
3. Buy Now, Write Off Now (Depreciation & Section 179)
Two big wins here:
100% bonus depreciation is back — and permanent.
Section 179 limit increased to $2.5M with a higher phase-out threshold.
Translation?
Buy software, hardware, or equipment your startup needs and expense it immediately.
No slow drip of deductions.
4. Predictability (QBI & Interest)
The only thing predicable at a startup is…your tax policy? Correct!
The Qualified Business Income (QBI) deduction — up to 20% — is now permanent.
Interest expense rules are more favorable, which means debt financing is cheaper and more flexible.
Translation?
Forecasting and planning is a little smoother. Your CFO sleeps better.
What Didn’t Change (And Why It Matters)
Carried interest rules? Untouched. If you have VC investors, their business still works the same way. (I’d read this as good news. No one wants stressed investors, changing up their financial models.)
Excess business loss limitations? Expanded and made permanent. That means founders can’t lean as hard on early-stage losses to offset non-business income. (Not ideal but now we know and will come out in the wash with your big exit! 😉)
The Bottom Line
Lots of good stuff for startups.
Use ChatGPT for anything you don’t understand! I learned a lot in writing this article and ChatGPT was way more helpful than the IRS docs. #sorrynotsorry 😬😂🥴
Talk to a tax professional.
Say thank you to Meredith Kowal the next time you see her for inspiring this helpful post!
Original Summary Doc:
Key Provisions of the One Big Beautiful Bill Act: What Tech Startups Should Know
(And more info on the Aprio website.)
Has anyone already changed strategy because of OBBB? Which one of these updates are you most excited about?