Zorilla | The AI Agency | Blog

Published: July 2025

The One Big Beautiful Bill Act of 2025 (H.R. 1) has reshaped the landscape for artificial intelligence companies operating in the United States. With its signing on July 4, 2025, AI professionals need a clear framework to understand and investigate how this legislation affects their organizations.

Important Note: This blog post is for informational purposes only and does not constitute legal advice. Organizations should consult with qualified legal counsel to understand specific compliance requirements and implications for their circumstances.

What Happened to AI Regulation?

Perhaps the most significant AI-related development was what didn’t make it into the final law. A proposed 10-year federal moratorium on state AI regulation was removed by a 99-1 Senate vote, preserving states’ authority to regulate artificial intelligence. This means AI companies must continue navigating state-by-state regulatory frameworks while taking advantage of new federal benefits.

Key Areas for AI Organizations to Investigate

1. Federal AI Investment Opportunities ($850M+ Available)

The Act allocates substantial funding for AI initiatives across government agencies:

• Defense Department: $200 million for AI-powered financial audit automation (through 2029)
• Energy Department: $150 million for transformational AI models in scientific research (through 2026)
• Commerce Department: $500 million for federal IT modernization using commercial AI
• Medicare: $24 million for AI-based fraud detection tools

Investigation Framework:

• Review your company’s eligibility for federal contracts
• Assess alignment with government AI procurement standards
• Explore partnerships with national laboratories
• Evaluate opportunities in the “American science cloud” initiative

2. Tax Benefits That Could Transform Your Bottom Line

The legislation introduces game-changing tax incentives for AI companies:

Immediate Benefits to Explore:

• 100% immediate deduction of domestic R&D expenses (2025-2029)
• Full bonus depreciation on AI equipment purchases after January 19, 2025
• Increased Section 179 expensing limit from $1.25M to $2.5M
• Enhanced pass-through deduction from 20% to 23% (permanent)
• Retroactive R&D expensing back to 2021 for qualifying small businesses

Investigation Framework:

• Calculate potential tax savings under new R&D provisions
• Review equipment purchase timing for maximum depreciation benefits
• Assess corporate structure optimization opportunities
• Document R&D activities for retroactive claims if eligible

3. Foreign Entity Restrictions: The New Compliance Reality

The Act imposes strict limitations on companies with certain foreign connections:

Key Restrictions to Review:

• 10% individual / 25% aggregate foreign ownership limits
• 25% foreign debt holding threshold
• $1 million licensing agreement cap with entities from China, Russia, Iran, North Korea, Cuba, or Venezuela

Investigation Framework:

• Conduct comprehensive supply chain audits
• Review all foreign partnerships and licensing agreements
• Assess current ownership and debt structures
• Implement verification systems for ongoing compliance
• Budget for $100K-$1M annual compliance costs

4. Infrastructure and Spectrum: New Opportunities

The restoration of FCC spectrum auction authority through 2034 opens doors for AI applications requiring high bandwidth:

• 800 MHz of spectrum to be auctioned
• Enhanced support for 5G/6G development
• Benefits for edge computing and autonomous vehicle applications

Investigation Framework:

• Evaluate spectrum needs for your AI applications
• Assess opportunities in edge computing and IoT
• Plan for enhanced connectivity in product roadmaps

5. Workforce and Talent Considerations

The Act creates mixed impacts on AI talent development:

Challenges:

• New caps on graduate student loans may affect STEM talent pipeline
• Increased H-1B visa fees (+$675 per worker)
• $170.7 billion for enhanced worksite enforcement

Opportunities:

• New Workforce Pell Grants for 8-15 week AI training programs
• Support for short-term high-skill occupation training

Investigation Framework:

• Review international workforce costs under new fee structures
• Explore partnerships with training programs
• Assess domestic talent development strategies

Strategic Planning Checklist

To navigate this new landscape effectively, AI organizations should:

Immediate Actions (Q3 2025):

• [ ] Conduct foreign entity compliance audit
• [ ] Review R&D expense documentation for retroactive claims
• [ ] Assess equipment purchase timing for depreciation benefits
• [ ] Evaluate federal contract opportunities

Near-term Planning (Q4 2025 – Q1 2026):

• [ ] Develop state-by-state regulatory compliance strategy
• [ ] Optimize corporate structure for tax benefits
• [ ] Establish supply chain verification systems
• [ ] Create workforce development partnerships

Long-term Strategy (2026-2029):

• [ ] Maximize domestic R&D during expensing window
• [ ] Position for spectrum auction opportunities
• [ ] Build relationships with federal agencies
• [ ] Prepare for post-2029 tax landscape

Resources for Further Investigation

• Official Text: Review the full legislation at waysandmeans.house.gov
• Tax Guidance: Consult with qualified tax professionals
• Legal Compliance: Engage legal counsel for foreign entity restrictions
• Federal Opportunities: Monitor agency procurement announcements

Conclusion

The One Big Beautiful Bill Act creates a complex but potentially advantageous environment for AI companies. While navigating new compliance requirements—particularly around foreign entities—organizations can benefit from substantial tax incentives and federal investment opportunities.

The preservation of state regulatory authority means the compliance landscape remains fragmented, but companies that effectively leverage the Act’s benefits while maintaining clean supply chains can gain significant competitive advantages.

Remember: This framework is a starting point for investigation. Each organization’s situation is unique, and professional guidance is essential for making informed decisions about compliance and strategic planning.

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Disclaimer: This blog post provides general information only and should not be construed as legal, tax, or professional advice. Organizations should consult with qualified professionals to understand how the One Big Beautiful Bill Act specifically affects their operations.