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Kozi Checks & Balances TaxTactics News

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July 23.2025

2 Minutes Read

How the OBBBA’s Changes to Expensing Can Boost State Economies

OBBBA full expensing benefits for states at sunset over US Capitol.

Why States Should Adopt Full Expensing Provisions

The recent passage of the One Big Beautiful Bill Act (OBBBA) brings significant changes to how businesses can expense their investments, with substantial implications for state tax codes. As the bill advocates for full expensing, states are presented with a choice: either align their tax systems with these pro-growth policies or risk lagging behind in fostering investment and economic development.

Understanding the Impact of Expensing

Full expensing allows businesses to deduct the cost of their investments immediately, which can encourage more substantial capital expenditure. This shift away from traditional depreciation, which spreads the deduction over many years, represents a fundamental change in how businesses can manage their taxable income. States are now challenged to rethink how their own tax policies can support these beneficial changes.

Economic Justifications for State Conformity

The economic rationale for conforming to OBBBA's expensing provisions is straightforward: enhancing capital investment leads to increased worker productivity and, ultimately, job creation. By removing barriers that depreciation schedules impose, states can create a more favorable environment for businesses, attracting companies that might otherwise hesitate to invest.

Comparing State Responses

While the OBBBA has set a solid framework, the responses from individual states will vary. Some states are already positioning themselves to incorporate these new provisions into their tax codes, while others may be slower to adopt changes. The urgency for action is clear; states that embrace full expensing could see significant revenue growth as businesses thrive.

Investments in Innovation and Competitiveness

One of the standout features of OBBBA is its focus on innovation, reversing previous policies that hampered the immediate expensing of research and development costs. This change signifies recognition of the importance of nurturing innovation-driven economic landscapes. States that recognize the value in aligning their tax policies with these changes will likely see a surge in competitiveness and innovation.

In conclusion, as states grapple with the implications of OBBBA, embracing its expensing provisions could lead to profound economic benefits and a more prosperous business environment. The time to act is now—states should ensure their tax structures support sustainable growth for all.

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10.30.2025

Illinois Lawmakers Push Rush Tax on Unrealized Gains — What It Means

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10.23.2025

How OBBBA Upheld the Progressive Tax System Amid Complexities

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10.07.2025

The Hidden Costs of Property Tax Repeal: Why Revenue Replacement Matters

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How the OBBBA’s Changes to Expensing Can Boost State Economies

Why States Should Adopt Full Expensing Provisions

Understanding the Impact of Expensing

Economic Justifications for State Conformity

Comparing State Responses

Investments in Innovation and Competitiveness

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