The summer of 2025 brought us a new heavyweight in tax legislation: the One Big Beautiful Bill Act (OBBBA), signed into law on July 4th. The new bill was over 180 pages, but we dialed in on the parts that will most affect our crypto clients (sorry, we won’t be chatting about the new tax breaks for tips - I don’t think Trump was talking about MEV on Ethereum or SOL-JITO tips). Now that we’re halfway through October, it’s time to start thinking about these changes and how they can shake up your 2025 tax return or your plan for amending prior year returns.

Wait, R&D is Changing Again?

Let's start with the provision that has us most excited for our crypto clients. OBBBA is amending Section 174 and restoring immediate expensing for domestic research and development costs. This is massive for crypto businesses, particularly those developing protocols, DeFi platforms, or any blockchain-based software. Typical R&D costs that our clients incur include:

• Protocol development and smart contract programming
• DeFi mechanism design and testing
• Blockchain infrastructure development
• Cryptographic research and implementation
• Token economics modeling and testing
• Basically any new software that is being developed and testing for a company product

Under the old rules, your development costs had to be capitalized and amortized over 5 years for domestic work or 15 years for foreign work (starting in the midpoint of the taxable year). Now, you can deduct 100% of your domestic R&D expenses in the year they're incurred. We spent countless hours mastering these arbitrary rules, but I guess now we can sweep those under the tax rug. 

There is one catch still: foreign R&D costs are still subject to the 15-year treatment, so geographic sourcing of your development work matters more than ever. If you're using contractors in Eastern Europe or Asia for core development, those costs still face the lengthy amortization schedule. Most of our clients have international contractors and vendors in those regions, so this will be an unpleasant wake up call from the rosy headlines on R&D.

What to do for your 2025 return

Since we’re switching rules (again), the IRS has provided R&D transition guidance. Companies can also choose to handle their accumulated unamortized R&D costs from 2022-2024 in a few different ways:

1. Deduct the full balance in 2025
   In this scenario, you take whatever costs haven’t been amortized yet and deduct them on your 2025 return. You don’t have to amend prior year returns.

2. Spread out the deduction evenly across 2025 and 2026
   For example, if you have $100,000 in costs that haven’t been amortized yet, you could deduct $50,000 in 2025 and $50,000 in 2026 (again, no need to amend prior years)

3. For smaller crypto businesses (under $31 million in average receipts), you can elect to apply the new rules retroactively by amending prior returns. Elections must be made by July 6, 2026, or within the statute of limitations for affected returns.

Whatever course the client chooses depends on their tax strategy and revenue numbers, but for most of our clients, we’re recommending to deduct all of the unamortized costs in 2025 (amending prior years is costly and since most startups are losing money, their total tax owed isn’t impacted).

Bonus Depreciation is Back (And It's Permanent)

The restoration of 100% bonus depreciation for qualifying property acquired after January 19, 2025 (Trump’s inauguration date) is another win for crypto businesses with capital investments. This applies to tangible personal property with a recovery period of 20 years or less, which covers most of your hardware needs. For our crypto clients, this includes tangible assets such as:

• Mining equipment and ASICs
• Servers and data center infrastructure
• Office equipment for your crypto business

Bonus depreciation is a first-year depreciation deduction that allows businesses to deduct significant costs related to qualified asset purchases (and bonus depreciation can create net operating losses, which is a great tax planning opportunity).

Under the old rules, bonus depreciation decreased by 20% every year under the following schedule:

• 2018 - 2022: 100% (meaning 100% of qualified asset purchases can be deducted)
• 2023: 80% (now only 80% of qualified asset purchases can be deducted)
• 2024: 60%
• 2025: 40%
• 2026: 20%
• 2027 and after: 0%

For example, if you purchased mining equipment for $80,000 in 2022, you could immediately deduct it on your tax return and realize the benefits. These benefits were set to phase out in 2027 completely, but luckily OBBBA made the 100% deduction permanent.

OBBBA also touched on another depreciation item - Section 179. Here’s a quick comparison on the difference between bonus depreciation and Section 179 depreciation (I know, it’s confusing for no reason):

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Under OBBBA, the  Section 179 deduction increases to $2.5 million (up from $1.25 million), with phase-outs starting at $4 million. For smaller crypto operations, this might actually be more useful than bonus depreciation, especially in states that don't conform to federal bonus depreciation rules.

Pass me the SALT

This is a spicy (or should I say, salty?) provision of OBBBA. There is a temporary increase in the state and local tax (SALT) deduction cap from $10,000 to $40,000 for tax years 2025-2029. For crypto entrepreneurs in high-tax states like California and New York, this is a huge tax break and savings opportunity. Deducting SALT taxes is an itemized deduction, so if you’re paying high state income taxes, your SALT deduction could easily outstrip your standard deduction (note - this provision affects your personal tax return, not your business return like the R&D and depreciation changes likely do).

The catch is that the SALT deduction phases out for high earners. The deduction starts decreasing at $500,000 modified adjusting gross income (MAGI) for joint filers ($250,000 for single filers) and drops back to $10,000 at $600,000 MAGI ($300,000 for single).

A related topic here is PTET. I remember first learning about PTET (pass-through-entity-tax) when we started Hash Basis because we were a Limited Liability Partnership (LLP). PTET allows pass-through entities like partnerships to pay state taxes at the entity level, bypassing the SALT cap entirely. California extended their PTET through 2030, though they've added new penalties for missed June 15th prepayments starting in 2026.* New York's PTET program continues with no expiration date. This means that if you’re an owner of a passthrough entity, you can have the entity pay taxes for you (thereby decreasing the net income that flows down to you).

* California is strict about this deadline. If the entity doesn’t pay the greater of $1,000 or 50% of prior year’s PTET liability to the Franchise Tax Board by June 15, they lose the ability to take PTET that year. Put another way, to get the PTET benefit in 2025, you would’ve had to pay at least $1,000 by June 15, 2025. I completely forgot about this deadline because we converted our LLP to an S corp and even though it’s still 2025, I can’t use this benefit. :( 

However, for 2026, you are still eligible for PTET benefits even if you missed the deadline - your PTET credits are instead reduced by 12.5% of the amount unpaid as of June 15, 2026. For example,

If a partnership should have prepaid $40,000 by June 15, 2026, but only prepays $30,000:

• Underpayment: $10,000
• Penalty: 12.5% of $10,000 = $1,250 reduction in PTET credits, allocated among owners

For high earners, PTET is a way to circumvent the SALT phase outs but it definitely requires thinking ahead.

I’m Interested in…Business Interest!

This change is more niche and won’t affect many of our clients, but it’s useful nonetheless. OBBBA restores the business interest deduction calculation to an EBITDA basis (earnings before interest, taxes, depreciation, and amortization) rather than the more restrictive EBIT (earning before interest and taxes) basis. The deduction is now limited to 30% of Adjusted Taxable Income, which adds back depreciation and amortization (before, you couldn’t add these back). EBITDA is usually higher than EBIT, meaning more business interest is able to be deducted.

For leveraged crypto businesses (such as miners with equipment financing or funds using margin strategies), this means you can deduct more interest expense. Here’s a practical example of how this would work:

• Taxable income = $1,000,000
• Depreciation = $450,000
• Mining equipment interest expense: $550,000
• Adjusted taxable income = taxable income + depreciation = $1,000,000 + $450,000 = $1,450,000
• 30% limit = 30% x $1,450,000 = $435,000
• This means $435,000 out of $550,000 of interest expense can be deducted

Before OBBBA, you could only deduct $300,000 of interest ($1m x 30%).

The improvement becomes even more powerful when combined with the restored bonus depreciation. You can now expense qualifying assets which contributes to a higher Adjusted Taxable Income base for your interest deduction calculations.

Painting the Picture for Crypto Businesses

OBBBA introduced way more tax updates, but even the few mentioned above are interconnected and deserve some brain time. For example, R&D expense decisions affect the EBITDA calculation for business interest limitations. PTET also reduces your adjusted gross income at the entity level. The timing of equipment purchases affects both depreciation benefits (bonus and section 179) and cash flow for R&D activities. See below for some specific items to review with your tax accountant before the year is up:

• Review your R&D expense classifications and consider whether to deduct accumulated prior-year costs in 2025 or spread them over two years (or amend prior year returns)
• Evaluate equipment purchase timing to maximize bonus depreciation benefits
• Model PTET elections in your operating states, especially if you're above the new SALT phase-out thresholds on your personal taxes
• Consider the makeup of your development team (i.e. US versus non US members) since international workers do not receive preferential R&D treatment

OBBBA sparked a lot of debate in the US, but at the end of the day, the tax changes are beneficial to most American crypto companies. OBBBA provides the tools for sophisticated tax optimization—the question is whether crypto businesses will take advantage of them. Who knew being a tax accountant could be so thrilling.

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This article is for informational purposes and should not be construed as tax advice for your specific situation.