The One Big Beautiful Bill Act, commonly referred to as the OBBBA or OB3, was signed into law in July 2025. This new legislation is reshaping the financial and operational landscape for life sciences companies across the United States. Designed to stimulate innovation, investment and domestic manufacturing, the OBBBA introduces a suite of tax and regulatory incentives that can be strategically leveraged by biotech firms, pharmaceutical manufacturers and medtech startups alike.
Whether you’re scaling up R&D, expanding production or optimizing your global footprint, the OBBBA offers a timely opportunity to accelerate growth and enhance competitiveness.
Key Opportunities for Life Sciences Firms
Immediate R&E Expensing
The OBBBA reinstates full expensing for domestic research and experimental (R&E) costs, allowing companies to deduct these investments in the year they’re made. This change significantly improves cash flow and encourages reinvestment in innovation.
Retroactive Tax Relief for Small Businesses
Eligible small businesses — those with three-year average gross receipts under $31 million — can retroactively apply R&E deductions to prior tax years. This provision enables companies to recover cash and strengthen their financial position for future growth.
100% Bonus Depreciation for Capital Investments
Life sciences firms can now fully depreciate qualified production property, including lab equipment and manufacturing facilities. This incentive supports modernization and expansion of domestic operations.
Disclosure Requirements in 10-Q and 10-K Filings
Life sciences companies impacted by the OBBBA must ensure transparent and timely disclosures in their quarterly (10-Q) and annual (10-K) filings. The Securities and Exchange Commission (SEC) requires public companies to disclose material tax law changes and their financial implications under Regulation S-K and Regulation S-X.
Key disclosure considerations include:
- A detailed explanation of the impact of the OBBBA on current and deferred tax assets and liabilities.
- Adjustments to effective tax rates and reconciliation of statutory and effective rates.
- Management’s discussion and analysis (MD&A) of how the OBBBA affects liquidity, capital resources and strategic planning.
- Disclosure of accounting policy changes and estimates related to tax positions and asset capitalization.
Auditors and financial reporting teams should collaborate closely to ensure that all relevant impacts of the OBBBA are accurately reflected and clearly communicated in SEC filings. This not only ensures compliance but also builds investor confidence through transparency.
Takeaways
The OBBBA is a game-changer for the life sciences industry. It empowers companies to innovate faster, grow smarter and operate more efficiently. As audit and advisory professionals, our team helps life sciences firms identify opportunities within the OBBBA, align their strategies and ensure compliance with evolving disclosure requirements.
Now is the time to act. Let’s explore how your organization can benefit from this landmark legislation and position itself for long-term success.
Author: Zabi Syed, CPA | [email protected]
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