The New Tax Game Changer: What the One Big, Beautiful Bill Act Means for Crypto
Quick Overview
On July 4, 2025, the One Big, Beautiful Bill Act—let’s call it the Act—was signed into law, shaking up the Internal Revenue Code, aka the Code. This Act is an enormous deal for each US and international firms, especially those dabbling within the exciting world of cryptocurrency and digital assets. It affects every part from exchanges and payment processors to crypto funds and mining firms. So, in the event you’re within the crypto space, you’ll definitely need to concentrate to how this reshapes the tax landscape.
What’s Inside?
- Research and Experimental Expenditures
- Bonus Depreciation and Immediate Expensing
- Business Interest Expense Deductions
- Revamping GILTI and FDII
- SALT Deduction
- Other General Changes
- Looking Ahead: GENIUS, CLARITY, and Lummis Bills
Research and Experimentation: A New Dawn
The Act brings back full expensing for domestic research and experimental (R&E) expenditures under recent section 174A. This is a sigh of relief for digital asset firms working on blockchain innovation within the US, because it means immediate tax relief. However, in the event you’re doing R&E overseas, you’ll still be taking a look at a 15-year amortization. Decisions between quick expensing or spreading costs over time could produce other tax consequences, so it’s clever to crunch some numbers and see what suits your organization best.
At the state level, things get a bit more complex. Some states might jump on board with the federal changes, while others could persist with the old ways of amortizing costs. This creates a little bit of a puzzle for firms operating in multiple states, especially those with globally distributed teams.
Bonus Depreciation: A Win for Some
The Act permanently reinstates 100% bonus depreciation. This is great news for mining firms who can now expense the price of servers and infrastructure immediately, potentially boosting money flow. But beware, not all states follow federal rules on this. So, while you may get a break federally, you can find yourself with higher taxable income on the state level, which adds one other layer of complexity.
Interest Deductions: Easing the Load
The Act shifts back to an EBITDA-based limitation for business interest deductions under section 163(j). This is a boon for crypto firms counting on debt financing or those investing in capital. It broadens the bottom for calculating interest deductions, easing the tax burden. However, some states won’t play ball, resulting in possible mismatches in interest deductions across different jurisdictions.
FDII and GILTI: Navigating the Maze
The Act tweaks the FDII and GILTI regimes, initially introduced through the Trump era. These changes are crucial for digital asset firms operating internationally. If you are running an exchange in a tax-friendly foreign jurisdiction, you’ll have to model these changes to see their impact and ensure compliance across states that align with federal rules.
SALT Deduction: A Temporary Relief
Individuals, here’s a bit of fine news: the SALT deduction cap is temporarily raised to $40,000. While this might offer a breather for crypto founders in high-tax states, it doesn’t change the pass-through entity tax workaround. This means cryptocurrency startups can still shift state tax burdens to the entity level, maintaining their federal tax advantages.
New Excise Tax: A Curveball
The Act introduces a brand new excise tax on certain remittance transfers, which could affect digital asset firms engaged in cross-border payments. Cryptocurrency transactions might dodge this as a result of the present definitions, but it surely’s price maintaining a tally of regulatory interpretations that might change the sport.
Income Tax Exclusions: A Nod to Workers
In a move to support the workforce, the Act excludes income tax for suggestions and additional time pay. While that is geared toward individuals, crypto firms that hire independent contractors or gig staff might have to tweak their payroll and tax reporting systems.
What’s Next within the Crypto Legislation Pipeline?
As if the Act wasn’t enough, Congress can also be gearing up to debate landmark bills during “Crypto Week” in mid-July 2025. The CLARITY Act and the GENIUS Act are making waves, aiming to establish a comprehensive regulatory framework for digital assets. These efforts are part of a bigger agenda to solidify the US as a pacesetter in Web3 innovation.
The GENIUS Act, already passed by each the Senate and the House, is now awaiting President Trump’s signature. It stands as essentially the most robust federal framework for regulating payment stablecoins within the US. Meanwhile, the CLARITY Act, having cleared the House, is on its option to the Senate. It seeks to bring clarity to digital asset regulation by defining key terms and conditions.
Senator Cynthia Lummis can also be in the combo, introducing bills geared toward overhauling how digital assets are taxed. It’s a dynamic time for cryptocurrency laws, and we’ll keep you updated on any major developments.
Image Credit: www.globalcompliancenews.com
