Tax policy shifts: What CFOs need to know to stay ahead

The following is a guest post from Richard Bernstein, an enrolled agent and former IRS R&D tax engineer at the IRS. 

As an IRS engineer and R&D software expert for many years, I was once assigned to provide technical advice to a group of IRS executives tasked with creating what would become known as the ASC 730 Directive. The executive group had been instructed to draft a directive allowing large public software firms in Silicon Valley to claim the R&D credit without paying “big bucks” to their R&D consultants.

For large firms, these consultants are usually the R&D tax credit division of a Big Four accounting firm. For about a year, our group met at sites in Silicon Valley, Houston and Oakland, California, often with the Tax Executives Institute in tow. I was aware of the need for this directive because, while performing my regular duties, auditing the R&D tax credits of public firms, tax directors often confided in me that their staff had created the R&D credit in‑house because the charge from their Big Four accountant was just too high.

Another IRS employee drafted for this “directive creation” task was a knowledgeable revenue agent based in Ithaca, New York, named Jim. Before joining the IRS, Jim had a career as a CFO at a public firm, but left after some problems with the SEC. Jim, like me, had been assigned to this task due to his prior IRS experience in public accounting. Jim had a saying he often used, at the drop of a hat, when discussing taxpayers’ motivation to file for the R&D credit. He would say, “the tail doesn’t wag the dog” when referring to the R&D tax credit. What he meant was that, in his opinion, public firms will not alter their financial plans to optimize for the R&D tax credit. But in a slightly backhanded way, he also displayed his disdain for tax credits, in particular, and for engineers, in general. Ugh!

The question is: Does U.S. R&D tax credit policy encourage CFOs to create R&D projects in a way that creates a supportable credit, or is the R&D tax credit just a year-end, check-the-box, cleanup task?

Why smart CFOs sometimes leave money on the table

Smart CFOs often leave money on the table — especially around R&D and other tax incentives — due to information gaps, risk perceptions and how incentives are positioned within the organization.

The main reasons for this include:

Structural design. Due to the cost charged by the Big Four for R&D expertise, the tax credit is targeted mostly to large firms, while small and midsized firms, which could benefit the most, see limited value due to risk. Additionally, frequent changes to tax law regarding the Treasury’s treatment of R&D expenses make it difficult to do long‑range capital planning.

IRS friction and compliance risk. Many finance teams consider the required documentation to be burdensome. This has only gotten worse with new IRS filing demands concerning business components. In addition, a few recent high‑profile IRS wins in Tax Court have left CFOs sensitive to audit risk. However, some software startups, such as TaxNova.ai, are developing tools specifically to address this problem. CFOs who surmount the documentation requirements will still need to hire experienced R&D experts to modify the documentation into an IRS-ready, R&D study. And ultimately, to defend the study before the IRS should it ever be audited.

Organizational perceptions. Some executives still believe that the R&D tax credit is only for laboratory R&D or big tech. This leaves many otherwise qualified firms missing the R&D tax credits. Many growth firms saw little value in a non-refundable tax credit in their early years, and these perceptions persist even after changes to the tax law that offset payroll taxes. In addition, many firms treat tax credits as a year-end tax cleanup task rather than a cash-flow lever and therefore never consider them in their capital allocation toolkit.

Sadly, some CFOs think that the easiest “design fix” is not to file for the R&D tax credit at all.

A different view from the field

But not everyone thinks the glass is half empty. Some, like Jad Meouchy, founder of BadVR, a small, privately held firm located in Los Angeles, feel differently. BadVR provides visualization services to the government and the private sector, and he feels that the R&D tax credit has been a positive for his business. Meouchy said, “A lot of what we do is building a future vision and executing on these unique ideas that, for example, our DOD partners have.” Meouchy further feels that the R&D tax credit “is a good incentive, not necessarily because we rely on it, but because anytime there’s a signal like that, it just kind of tells people what’s valued, and when innovation is valued and there’s an incentive for innovation, then all of a sudden, everybody wants to do innovation.”

Perception, rather than facts, often limits the use of the R&D tax credit in the U.S. With over a hundred thousand U.S. firms taking this tax credit annually, CFOs should consider how their own biases affect the bottom line. 

Importers in the U.S. stand to take in an estimated $166 billion in tariff refunds, and now, some of their customers are angling for a piece of the pie.

While consumers and other businesses that paid higher prices from importers due to the now-illegal tariffs aren’t entitled to refunds directly from the government, they may have a chance at getting something back from the suppliers they purchased from. It’s an area closely watched by many legal observers and experts, yet one that finance teams may not even be aware of.

Glen Frost, founding partner of Frost Law Firm, is one such lawyer trying to get refunds for what he calls “downstream businesses,” that is, companies that didn’t pay tariffs directly but still had to pay higher prices from their importers. He says he’s already had some success in getting their direct suppliers to cooperate on refunds.

“I’ll be frank: Many of the suppliers are not going to refund the money; they’re going to try to keep it, unless they’re asked,” Frost says. “A lot of the businesses and even the CFOs we’re talking to, if they’re downstream, they don’t realize they can go to their supplier and get refunds.”

Frost acknowledges that it’s still a complex process, but he believes his clients are poised to get their fair share of the refund money. Some importers may also choose to issue refunds to maintain business relationships and avoid protracted court battles.

As Frost sees it, importers who get such refunds without sharing them are getting an unjust enrichment, or a windfall they wouldn’t otherwise be entitled to.

Frost says that several suppliers didn’t explicitly spell out cost increases they passed onto their customers, which is why his team has spent time analyzing hundreds of thousands of invoices. Their goal, he says, is to compare invoices both before and during tariffs issued under the International Emergency Economic Powers Act to determine how much money customers could be entitled to.

Frost declined to share specific names of clients, but noted that the category of potential downstream businesses that stand a chance at getting a chunk of tariff refund money includes companies like restaurant chains, health care systems, retailers, distributors and more.

Big vs. small importers

It’s worth noting that some large-scale transportation companies, such as FedEx, DHL and UPS, have already laid out plans to issue tariff refunds to customers. “FedEx will issue refunds for IEEPA tariffs paid to shippers and consumers who originally bore those charges once FedEx begins receiving refunds from CBP,” the company wrote in an FAQ document regarding tariff refunds.

Such refunds are different, and arguably a bit simpler, than the type that Frost is seeking for his clients. Frost notes that in some cases, importers “blended” the price of tariffs into the overall cost. In the case of big shipping companies, though, tariff prices are typically explicitly spelled out in an invoice, which makes downstream refunds easier to process.

“They actually know how much cost was passed on because they broke it out,” says Tim Meyer, international trade law professor at Duke University School of Law. “You can see in your shipping bill what the additional tariff cost was.”

Still, existing contractual agreements in other situations might pave the way for refunds further down the supply chain. Downstream businesses might find that their agreements with importers already have some kind of remedy in them.

And while such businesses don’t have a claim against the federal government, they might be able to pursue refunds under contractual agreements, Meyer notes.

Aside from individual consumer class action suits, Meyer says he’s not aware of any business-to-business moving through the courts just yet. That could be because businesses may have arbitration clauses in contracts with importers.

“It’s entirely possible that business-to-business cases could be resolved by arbitration,” Meyer says. That means that the full scope of these types of disputes may not be publicly known.

Tariff refunds as taxable income?

There is, of course, more at risk than just business relationships. Importers that seek tariff refunds from the government may carry an additional tax liability, says Mark Baran, managing director, national tax office, with accounting firm CBIZ.

“A lot of companies don’t realize that that’s oftentimes taxable income,” he says of tariff refunds. “If you previously received a tax benefit and baked it into your cost of goods sold, or you took a deduction … there’s a lot of rules to follow on when and how you take this into income. That could be a very significant amount.”

Baran notes that the same principle would apply to downstream buyers, as well, depending on how they recorded tariff costs in their books.

“Where tariffs were paid on imported items that the taxpayer deducted for income tax purposes, the refund of those tariffs constitutes a recovery of a previous year’s deduction that gave rise to a tax benefit,” CBIZ leaders wrote in a May 11 blog post. “Under the ‘tax benefit rule,’ a recovery of a previously deductible item is only taxable if and to the extent it provided the taxpayer with a tax benefit (e.g., reduction in liability or increase in a loss carryover) in a previous year.”

Tax considerations aside, there’s a great deal of uncertainty remaining in the tariff world. The Trump administration has been working to levy tariffs under differing authorities, for instance. And the Department of Justice earlier this month issued an appeal against some aspects of the Court of International Trade’s order directing the federal government to issue refunds.

“I think there’s clearly going to be litigation for a long period of time as new tariffs come online,” says Kathleen Claussen, professor of law at Georgetown Law.

Sponsored content

By Alteryx

AI is moving quickly into tax. Teams are using it to research legislation, summarize documents, draft supporting materials, identify anomalies and work through large volumes of information faster.

While the opportunity is real, so is the tension.

In EY’s 2025 Tax and Finance Operations survey, 86% of respondents ranked data, generative AI and technology as a top priority. Yet Deloitte found that only 29% of tax and finance executives believed AI would enhance accuracy. Tax professionals do not just need faster answers. They need answers they can trace, explain and defend. EY Tax and Finance Operations Survey | Deloitte Global Tax Policy Survey

So perhaps the more useful question isn't how much of the tax function AI can take on. It’s where AI belongs in the tax workflow — and where consistency matters more than intelligence.

AI works well where tax work requires interpretation

Some tax activities are a natural fit for AI because they depend on language, pattern recognition, classification and synthesis, the things large models are good at. Tasks like reviewing regulatory developments, pulling information out of contracts and invoices, searching internal tax knowledge, summarizing dense technical material or flagging transactions that deserve closer attention.

KPMG found that tax executives expected GenAI to help most with routine work, large-volume data interpretation, tax research and planning, and compliance and risk reduction. KPMG, Navigating the Forces of Change in Tax

But much of the work surrounding those activities has a different requirement.

It needs the same answer every time.

Some tax work needs rules, not predictions

Before a tax professional can analyze a position or review an AI-generated insight, the underlying data often has to pass through familiar steps.

Entities need to map to jurisdictions. Accounts need tax classifications. Accounting data needs to become tax-ready. Adjustments need to be applied. Inputs need to be reconciled. Exceptions need to be identified.

Those steps are not primarily AI problems. They are business logic problems.

The challenge is not figuring out the rule again every quarter but applying the rule consistently across every relevant record, entity and reporting period.

Yet that logic often lives in spreadsheets, workpapers or processes that tax teams partially rebuild each cycle. The result is more manual validation, harder-to-explain differences and less time for work that requires tax expertise.

AI should not replace logic that needs to execute predictably.

A stronger model separates three kinds of work

A practical approach to AI in tax looks less like handing an entire process to an AI system and more like combining three distinct strengths:

• AI handles ambiguity by reading unstructured information, spotting patterns, classifying content, summarizing source material and suggesting where someone should look next.
• Workflows handle consistency by connecting source systems, applying agreed mappings and transformations, validating inputs, executing repeatable rules, flagging exceptions and preserving lineage.
• Tax professionals handle judgment by deciding how law, facts, materiality and business context come together. They determine whether an exception matters, whether a position is supportable and whether an AI-assisted conclusion belongs in the final work product.

That separation becomes even more important as tax reporting grows more granular and machine-readable. Pillar Two reporting now includes standardized XML schemas, while public country-by-country reporting in the EU uses a common machine-readable framework. OECD GIR XML Guidance | European Commission public CbCR

As the volume and scrutiny of tax data increase, teams need to know not just the answer, but where it came from, which logic produced it and what received human review.

Where Alteryx fits

Alteryx is a unified analytics and automation platform that helps business teams connect data from different systems, prepare and transform it, apply business rules and turn recurring analytical work into governed, repeatable workflows.

For tax, that can mean codifying recurring logic such as entity and jurisdiction mappings, tax-sensitive account classifications, validation rules, reconciliations and transformations that feed provision, compliance, planning or other downstream systems.

Alteryx is not a tax engine, ERP or generative AI model. Its role is to provide the workflow and business-logic layer between source data, tax applications and AI-assisted processes.
That gives tax teams a stronger foundation for using AI: governed data, repeatable logic, clearer lineage and defined points for human review.

The goal was never autonomous tax.

It’s giving tax professionals more powerful tools without weakening the logic, evidence and control their work has always depended on. 

See it in practice: Hear from Crowe LLP on how they’re building trustworthy AI into real-world tax workflows with Alteryx → Register for webinar.

CFO.com's virtual event on June 17, "Navigating the Corporate Tax Frontier," brought together finance and accounting leaders to tackle the profession's most pressing challenges.

Across multiple panel discussions, speakers addressed everything from viral tax scams on social media to the inevitability of tax increases and the intersection of artificial intelligence and human expertise. Here are some of the most valuable insights from the event.

Human expertise bridges AI power and business impact

In the “How CFOs can future-proof their tax function” session, panelists all agreed that while artificial intelligence can speed up processes, it is humans who remain essential to interpret the outputs, validate accuracy and turn the data into actionable insights. 

“You can have all of this AI data, you can have all of this firepower to be able to get things done faster, to calculate more, to forecast better, but your ability to connect to other humans with that data and make a good information or forecast for the business, or become strategic as a unit, as a team, that's ultimately what's going to win,” said ​​Dean Quiambao, a technology industry leader at Armanino. “We believe in AI-powered humans, the people who have domain expertise that use AI, they're going to be unstoppable.”

Tim Mathis, head of tax and accounting, controller of Zelestra, added: “The ability for humans to interpret the data that's coming out of the AI is going to be key. People come into play when they can look at an output and go, ‘Yeah, that seems directionally reasonable, that's about what I expect.’ It doesn't mean it's exactly right, but it's directionally in the right format and looks reasonable. It's a message I can deliver that the non-tax people or the non-accountants will understand and take action. We're just providing input to empower the business to expand or increase what it's doing; that's where people are going to come into play.”

Raj Basi, vice president of Tax at AEG Fuels, offered a real-time example. “Just a couple of days ago, we asked two different AI tools a question, and we got two different answers. Same question, two different answers, and it required us, as the tax subject matter experts, to review it and come down on what was the right side at the end of the day,” Basi said.

Not if, but when for tax increases

Drawing parallels to past economic crises, Blake Oliver, co-host of The Accounting Podcast, warned during the “Tax at a turning point: What CFOs need to know” panel that tax increases are inevitable given the size of U.S. debt.

“It will come after we keep on printing dollars, because it's easier to print money and devalue the dollar than it is to raise taxes,” Oliver said. “And when neither party is interested in solving the problem through true fiscal means, and instead we print money, we'll end up in probably a similar cycle as the 1970s stagflation type of environment.” 

He added, “I know nobody wants to hear that, and I wasn't around for that, but I know it wasn't very much fun, and history repeats itself. We have examples of this throughout history … and I don't know if there's any reason to expect it would be any different for us, so it's going to be a challenge. I would look to history and recommend reading Ray Dalio's books on this, because he's done a lot of research on it, and he shows the pattern throughout time. If we read history and we understand it, then we can be prepared.” 

Tax scams and R&D credit relief

During the keynote address, CPA and tax attorney Jasmine DiLucci highlighted IRS red flags, the impact of reduced IRS staffing and addressed trending social media scams, such as misinterpretations of tax codes. 

DiLucci noted how most tax fraud schemes start by misusing real code sections or court cases. She said tax scheme promoters will find obscure or outdated cases, and then falsely claim that those authorities create a loophole.

“Every tax fraud scheme always starts with a code section, always starts with the court case. This one guy that has half a million followers has a court case on his website and he misspelled the name of the court case and it's from 1911, which is before income tax was ratified in the United States, and it was about an act or statute that doesn't exist anymore regarding a tax that wasn't income tax,” said DiLucci. “So they just take random things, and then they start saying it means X. Even when I posted about it, someone in the comments said, ‘No, he's got court cases. I think you don't know.” And I am like, ‘Do I not know? Because I am pretty sure you don’t know.”

DiLucci also discussed the impact she saw from the R&D credit reform as part of the One Big Beautiful Bill Act. 

“I saw a lot of business owners in 2022 holding their breath, hoping that Congress would continue the benefit. Then [those expenses] used to be still deductible, and then all of a sudden it was, ‘Well, now you get to amortize it.’ So I had a lot of clients who had a sudden overnight shock, where you're like, ‘Well, yeah, I want the credit, but I thought we were at a loss, now we have this insane profit because we just had to add back all of the expenses.’ And from a cash flow perspective, it became a problem because if you think about the typical business that's doing R&D, they don't always have a bunch of extra cash. A lot of times, they're spending their money on R&D development … so the new bill did right, and it restored it retroactively. It was a huge change.”

CPA as a flexible, foundational credential

In the “Tax in a post-150-hour CPA world" session, speakers emphasized that the CPA continues to be a great foundational skill set to be successful in business, not just finance and accounting. 

“You should at least get your CPA and then get some good experience,” said Omar Choucair, CFO of Trintech. “Then you can do anything you want — go to law school, go into marketing, go into sales — but you can't do it the other way. Our view is you have to start in accounting, because that's what gives you the base, and then you can do whatever you want.” 

Diane Matson, an accounting professor at the University of St. Thomas, said that by opening more flexible pathways to CPA licensure, the profession can compete for top talent.

“I don't know if I agree that the CPA will be easier to obtain. I think it's going to be easier in the sense of having different options to pursue… we do have some competition. More than some years ago, a person who's interested in quantitative issues could go into data analytics or business analytics,” said Matson.

It wasn't really an option 20 or 30 years ago, so I feel like we have more competition for these highly motivated students who like to work with numbers in some way,” she continued. “The pathways are great, having that other option. I think even with or without that, we'd still have some competition from other degrees and career paths that these sort of students would be looking at finance, data analytics, accounting — they're all sort of competing in my book.” 

The "Navigating the Corporate Tax Frontier" event is now available for on-demand viewing here.

Tax planning for 2026 is coming into focus as guidance and litigation begin to fall into place. 

Bloomberg’s 2026 Tax Policy Outlook outlines how recent tax changes are moving into an implementation phase, with full expensing provisions reinstated, adjustments underway to the corporate minimum tax and key elements of the global minimum tax framework already revised.

At the same time, provisions tied to capital investment, corporate minimum taxes and international coordination continue to take shape as the IRS issues guidance and courts address unresolved disputes.

Here are seven CFO-centric takeaways from the report:

 1. Bonus depreciation and targeted expensing are reinstated

The tax law permanently reinstates bonus depreciation, allowing upfront deductions for certain capital assets rather than spreading those deductions over time. It also provides 100% bonus depreciation for qualified manufacturing facilities placed in service before Jan. 1, 2031, expanding incentives tied to domestic production.

The report notes that additional IRS guidance is still needed to clarify which properties qualify under these provisions, with practitioners citing uncertainty around eligibility and scope.

2. The corporate alternative minimum tax is being narrowed through guidance

Treasury has taken steps to reduce the reach of the 15% corporate alternative minimum tax, including exemptions for insurance, shipping and utility companies and the exclusion of unrealized cryptocurrency gains. These changes follow criticism that earlier proposed rules were overly complex.

Further guidance is expected, particularly for companies with large research and development spending. The report characterizes the changes as adjustments to how the tax applies, rather than a repeal of the minimum tax itself.

3. IRS staffing and leadership challenges continue

The report states that the IRS workforce declined by about 25%, to roughly 75,000 employees, following early retirement and resignation offers in 2025. The agency continues to face turnover, funding uncertainty beyond January, a legal battle with President Donald Trump and the possibility of another government shutdown early in the filing season.

These conditions are cited as factors that could influence enforcement capacity, the pace of guidance issuance and the speed at which cases are resolved in 2026.

4. Large transfer pricing disputes remain unresolved

Several multibillion-dollar transfer pricing cases, including disputes involving 3M, Meta, Airbnb and Coca-Cola, are identified as among the most significant litigation matters continuing into 2026. The report highlights these cases by dollar magnitude.

Recent court decisions have focused closely on valuation methodologies and the assumptions underlying intercompany pricing, shaping how similar disputes are evaluated even as outcomes remain pending.

5. U.S. companies are exempt from key elements of the global minimum tax

International negotiators agreed to exempt U.S. companies from core provisions of the Organisation for Economic Co-operation and Development’s global minimum tax, establishing a side-by-side system that allows U.S. tax rules to operate alongside the international framework. The agreement includes safe harbors tied to eligible tax regimes.

The report also notes that transitional country-by-country reporting relief has been extended through 2027, alongside the introduction of an effective tax rate safe harbor intended to simplify compliance.

6. Expanded qualified small business stock rules influence transaction structuring

The tax law expanded the qualified small business stock gain exclusion, a provision commonly used in venture-backed investments. The report describes the expansion as having immediate implications for how companies assess eligibility.

Tax professionals cited in the report say the change is already influencing how transactions are structured, particularly in the mergers and acquisitions space. 

 7. Deductions for overtime and tipped income move toward implementation

Deductions for some overtime and tipped income take effect in tax year 2025, increasing the urgency of guidance ahead of the 2026 filing season. The Treasury has issued transition guidance for overtime and proposed rules for tipped income.

The report notes that practitioners continue to seek clarity on what qualifies as overtime and tips under the new provisions, signaling that further interpretation will be required.    

The following is a guest post from Ian Boccaccio, principal and income tax practice leader at Ryan. Opinions are the author’s own.

The One Big Beautiful Bill Act has delivered meaningful new opportunities for businesses, including 100% bonus depreciation, the restoration of immediate expensing for domestic R&D and permanent credit transferability. For companies that can act quickly and precisely, the potential for tax savings and improved cash flow is substantial. But the same provisions that create those opportunities are generating a new layer of operational complexity that many corporate tax departments are not yet equipped to handle.

Teams that cannot model the full scope of OBBBA's impact will find themselves not just stretched thin but at risk of missing benefits that require deliberate action to capture.

What is at stake

Before OBBBA, domestic R&D costs were amortized over five years, bonus depreciation was phasing down and credit transferability remained an evolving planning tool. OBBBA resets several of those conditions. Bonus depreciation returns to 100% for qualifying property placed in service after January 19, 2025. Section 174A restores full immediate expensing for domestic research and experimental expenditures. Credit transferability is now a permanent fixture, and buying discounted tax credits has become an annual exercise for most U.S. corporates. Companies purchasing $100 million in credits can realize $5 million to $9 million in cash savings.

At the same time, the bill introduces new planning tensions. Additional interest expense deductions available under OBBBA could create a Base Erosion and Anti-Abuse Tax liability for certain multinationals. Bonus depreciation can reduce taxable income in ways that limit a taxpayer's ability to benefit from the Foreign-Derived Intangible Income deduction. These interactions need to be modeled before returns are filed.

The state conformity problem

Federal changes do not automatically flow through to state returns, and OBBBA is creating significant state-level turbulence across three core areas: GILTI, 174A and depreciation.

Roughly half of states conform to the Internal Revenue Code on a rolling basis; the other half conform to an older version or selectively adopt provisions. OBBBA was enacted just as most state legislative sessions ended, meaning a majority of state-level responses will not materialize until well into 2026. This pattern is familiar: After TCJA, state adoption and decoupling dragged on for up to nine years, with California acting as recently as last June, one month before OBBBA was enacted. Tax preparation software and compliance matrices often lag those changes, so teams cannot assume their systems will capture the current state of the law.

States have also demonstrated a willingness to interpret federal IRC provisions in ways that directly contradict federal positions. Colorado, for example, has, through case law, disconnected from federal LLC classification for purposes of the state's 80/20 test for excluding domestic corporations with significant foreign factor representation. New Jersey case law previously held that NOL carryovers could be time-barred from change before legislation reversed that position. These kinds of independent state interpretations compound the complexity of an already unsettled conformity landscape.

On GILTI, approximately 12 states currently tax some portion of this income, and that number is growing, with Illinois and Minnesota among recent additions and Massachusetts actively considering legislation. The renaming of GILTI to Net CFC Tested Income under the new law creates a technical problem for states that referenced "GILTI" by name in their statutes. Some states allow the IRC Section 250 deduction related to GILTI, and those states will need to update their statutory language to avoid potential interpretation problems. Illinois has already updated its statute to account for the naming change.

On 174A, several states have already decoupled from the immediate expensing provision, citing revenue shortfalls. States that want to preserve maximum capitalization of research costs need to reference 174A specifically in their decoupling provisions without disturbing treatment under the existing Section 174. Conflating the two creates compliance risk. The less favorable federal treatment of foreign research costs, amortized over 15 years rather than immediately expensed, also creates a constitutional tension at the state level under Kraft, which prohibits states from discriminating against foreign commerce.

On depreciation, many states cannot afford to be as generous as the federal government in allowing accelerated deductions. Even so, even in states that have decoupled from existing bonus depreciation statutes, taxpayers may still have a viable path to claiming accelerated depreciation under IRC Section 168(n), since it is an entirely new section under the code rather than an amendment to existing rules. Whether a state's decoupling language captures a newly created section is a question teams should be asking now. Iowa and Oklahoma have administratively moved to include Net CFC Tested Income in their state tax base following the naming change, adding further complexity for multinationals with filing obligations in those states.

What tax teams should do now

Staying abreast of state law changes and ensuring those changes flow through the return is the most important discipline tax teams can adopt right now. That requires a manual review of state-by-state conformity status rather than reliance on software updates alone.

On GILTI and Net CFC Tested Income, companies that have not yet challenged states' ability to tax this income should examine the incremental state tax exposure under the OBBBA version of the provision and consider filing claims in affected jurisdictions. The wave of states moving to tax this income is growing, and companies that act proactively rather than waiting for an audit will be better positioned. Similarly, companies should consider taking protective positions on original returns challenging states' ability to apply the less favorable federal treatment of foreign research costs under Section 174, given the constitutional constraints under Kraft.

For companies with remaining R&D amortization balances, the acceleration election available in 2025 and 2026 is time-sensitive. Weighing that option against the amended return path requires a case-by-case analysis that accounts for filing costs, IRS processing delays and the cascading effect on state returns.

Setting clear expectations with the C-suite matters as much as the technical work. Finance leaders should understand that OBBBA's benefits are not automatic and that the window to act on several provisions is narrowing.

OBBBA represents a genuine opportunity for businesses willing to engage with its complexity. The most time-sensitive provisions are those tied to bonus depreciation elections, the 174A acceleration window and the Section 168(n) question at the state level. The companies that capture the most value will be those that treat OBBBA as an ongoing planning discipline, tracking state developments in real time and modeling provision interactions carefully.

While opinions on the One Big Beautiful Bill Act are mixed, a recent survey indicates that a plurality of CFOs expect their companies to benefit from it.

So said 44% of the 233 finance chiefs who participated in Grant Thornton’s fourth-quarter survey, compared with only 18% who believed the law would harm their financial position.

According to the survey report, companies are well-prepared to take advantage of OBBBA’s domestic opportunities, such as the restored 100% bonus depreciation, the reinstated immediate expensing for R&D costs and new rules for interest-expense deductions that make it easier for capital-intensive businesses to deduct interest.

The prospects for such tax savings are likely one reason why many companies are planning for heightened strategic spending in the coming year, the report noted. For instance, 51% of the survey participants said they expect operations expenses to increase, up from 35% who said so in Grant Thornton’s third-quarter survey.

Also, the portion who expect to cut costs on long-term strategic initiatives retrenched to 28%, down from 36% the previous quarter.

Further, the percentage of CFOs citing cash and liquidity as a top three area of focus fell sharply, from 45% in the third quarter to 30% in Q4. The same was true for cost optimization, which retreated from 48% to 37%.

Despite CFOs’ generally positive view of the OBBBA, significant concerns remain around the implementation of the law’s business tax provisions. Leading the list of worries were understanding eligibility and compliance requirements and adjusting tax-planning strategies for 2025 and beyond.

According to the report, though, company leaders may not be fully aware of everything the OBBBA offers.

For one, they may be missing out on opportunities to use provisions of the law to lower their international tax exposure, including reforms of GILTI, FDII and BEAT rules, said David Sites, national managing partner for Grant Thornton’s Washington National Tax office and the firm’s International Tax Solutions practice.

There also may be overlooked risks related to state taxes, Grant Thornton wrote. For instance, there may be increased state audit activity, as states are hiring some IRS employees who lost their jobs amid last year’s workforce reductions in a bid to rebuild their tax-enforcement ranks, “which have been understaffed for several years.”

“Companies shouldn’t underestimate the potential risks of lack of conformity across their state tax profile,” said Dana Lance, national tax managing partner for Grant Thornton Advisors.