Preparing for 2026 and Beyond: Long-Term Tax Strategy After the OBBB Law Updates

The One Big Beautiful Bill (OBBB), enacted July 4, 2025, brought immediate relief to businesses through restored 100% bonus depreciation and new expensing rules for domestic research. But these provisions are temporary. Beginning in 2028, bonus depreciation phases down again, and the treatment of research credits versus amortization remains complex. Business owners planning for 2026 and beyond need to shift their focus from short-term tax savings to sustainable long-term strategies.

In this post, we’ll review:

• how OBBB’s temporary rules will unwind,
  
  
• what risks and opportunities exist in 2026 and later years,
  
  
• how R&D expensing interacts with future credits,
  
  
• and practical steps for long-range tax planning.
  
  

Background: OBBB’s “relief now, limits later” design

OBBB restored 100% bonus depreciation through 2027 (IRC §168(k), OBBB §131) and created Section 174A for domestic R&E expensing. But it also locked in a phase-down of bonus depreciation starting in 2028 and kept the 80% limitation on net operating losses (IRC §172).

Definition Block: Net Operating Loss (NOL) Limitation

Under IRC §172(a)(2), NOLs generated in tax years after 2020 may offset only 80% of taxable income in future years. OBBB preserved this rule, meaning large deductions in 2025–2027 may not fully offset future income.

Key takeaway: OBBB gave businesses short-term relief, but structural limitations remain.

Bonus depreciation phase-out

• 2025–2027: 100% deduction for qualifying property.
  
  
• 2028: 80% bonus depreciation.
  
  
• 2029: 60% bonus depreciation.
  
  
• 2030: 40% bonus depreciation.
  
  
• 2031: 20% bonus depreciation.
  
  
• 2032 and beyond: 0% unless extended by Congress.
  
  

Key takeaway: Businesses should treat the next two years as a final window for full expensing.

R&D expensing vs. credits in 2026 and beyond

• Domestic research can still be expensed under §174A, but expensing shrinks the Section 41 credit base.
  
  
• Amortization may be worth considering for businesses prioritizing credits.
  
  
• Section 280C continues to prevent double benefits, requiring adjustments when credits are claimed.
  
  

Key takeaway: Companies must run forward-looking models to balance immediate deductions and long-term credit benefits.

Interest and NOL planning

• Amortized R&E must be added back when calculating adjusted taxable income under §163(j), affecting interest deductibility.
  
  
• NOLs remain capped at offsetting only 80% of taxable income, meaning carryforwards cannot completely shelter future profits.
  
  

Key takeaway: Leverage deductions while you can, but do not assume they will fully offset future income.

Worked example

Example
A biotech company spends $4,000,000 on domestic R&E and $2,000,000 on equipment in 2026. It earns $8,000,000 in revenue.

• Expensing and bonus (100%): Deduction = $6,000,000. Taxable income = $2,000,000. R&D credit (assume 10%) = $400,000.
  
  
• In 2028 (80% bonus): If the same investment is made, deduction = $4,000,000 R&E + $1,600,000 equipment = $5,600,000. Taxable income = $2,400,000. R&D credit base larger at $500,000.
  
  

At a 21% rate: 2026 produces $420,000 in tax savings plus $400,000 credit; 2028 produces $504,000 tax savings plus $500,000 credit.

Assumptions

• Equipment qualifies for §168(k).
  
  
• All R&E is domestic.
  
  
• Simplified credit calculation.
  
  

Action steps for business owners

• Plan capital purchases before January 1, 2028, to capture 100% bonus depreciation.
  
  
• Model R&D expensing vs. amortization to find the optimal deduction-credit balance.
  
  
• Forecast taxable income and NOL carryforwards under the 80% limitation.
  
  
• Evaluate financing under §163(j) to optimize interest deductibility.
  
  
• Build long-term scenarios for 2026–2031 to avoid surprises when bonus depreciation phases out.
  
  

Structured summary

• OBBB restored 100% bonus depreciation for 2025–2027 but phases it out starting in 2028.
  
  
• Section 174A allows immediate expensing of domestic R&E, but expensing reduces the credit base.
  
  
• NOLs remain capped at offsetting 80% of taxable income, limiting their future value.
  
  
• Section 163(j) interest limits still apply, with amortized R&E added back to ATI.
  
  
• Long-term planning must balance deductions, credits, NOLs, and financing to sustain tax efficiency beyond 2027.
  
  

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