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KPMG report: Treatment of domestic R&E expenditures under OBBBA—state tax and important federal considerations

State tax implications of the OBBBA's restoration of immediate expensing for domestic research and experimental (R&E) expenditures

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january 7, 2026

Pub. L. No. 119-21 (the “One Big Beautiful Bill Act” (OBBBA)) restored immediate expensing of domestic research and experimental (R&E) expenditures under new section 174A. In response, a number of states issued guidance on the treatment of these expenditures.

Read a January 2026 report prepared by KPMG LLP that discusses the state income tax considerations, as well as important federal income tax considerations, of the changes.

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