Big Beautiful Bill decoded: QSBS expanded to $15M, bonus depreciation restored, and R&D expensing fixed for US software companies

Summary

The Big Beautiful Bill represents the most significant U.S. tax legislation since the 2017 Tax Cuts and Jobs Act, according to Anker, founder of carry.com, a tax optimization platform. The bill makes permanent most TCJA provisions that were set to expire and introduces several structural changes with direct implications for founders, investors, and asset holders.

QSBS: Three Material Changes

Qualified Small Business Stock exemptions expand on three dimensions simultaneously. The per-shareholder exclusion ceiling rises from $10 million to $15 million. The asset threshold at time of share acquisition increases from $50 million to $75 million, measured against cash raised rather than valuation. And a new partial exemption structure now applies: holding shares for 3 years unlocks 50% of the exemption, 4 years unlocks 75%, with the full benefit still requiring the original 5-year hold.

The changes apply only to shares acquired on or after July 4, 2025. Employees who exercise options post-enactment may qualify, though the legal interpretation is still being clarified. The per-shareholder structure remains intact, meaning founders can transfer shares to family members or trusts to multiply the effective exemption. The Roblox founder, cited in a New York Times piece, structured 12 trusts to shelter $120 million under the old rules.

To qualify, a company must be a C-corporation, operate as an active trade or business, and be outside disqualifying categories including service businesses. In practice, tech-enabled service companies often qualify depending on how an accountant characterizes the business.

Bonus Depreciation Restored

Bonus depreciation is reinstated at 100%, allowing immediate expensing of physical assets with a useful life under roughly 10 years rather than spreading deductions across the asset's lifespan. Combined with cost segregation studies, which disaggregate a property into components like HVAC, windows, and doors, buyers of commercial real estate can offset a purchase price with front-loaded tax losses in the acquisition year. The provision also applies to private jets, heavy machinery, and vehicles, making it broadly relevant to capital-intensive businesses.

Estate Tax Threshold Doubles

The estate tax exemption is made permanent at $30 million per couple, up from a figure that was scheduled to fall to approximately $10 million under a sunset provision. Assets above the threshold remain taxed at 40%. Trust planning firms that had positioned for the lower threshold now face a substantially changed landscape. The effective exemption nearly tripled relative to what would have been the default outcome.

Section 174 Relief for U.S. Software Developers

A previously damaging provision, Section 174, had required software companies to amortize domestic developer costs over 5 years rather than expensing them immediately. For near-breakeven software businesses, this created taxable income on paper despite thin or negative real margins. The Big Beautiful Bill reverses this treatment for U.S.-based development costs, allowing immediate expensing. The fix applies specifically to domestic software development; offshore developer costs retain the amortization treatment, creating a structural tax advantage for companies that hire in the U.S.