Recent tax law changes and global trade policy shifts are actively shaping capital allocation, operational design, and global growth decisions for life science and biotech companies. That reality took center stage at the CBIZ New England Life Science & Biotech Summit, held on December 3. Katy Daiell, CBIZ managing director, and Jan Smallenbroek, CBIZ managing director and International Tax & Transfer Pricing Practice leader, unpacked the implications of the One Big Beautiful Bill Act (OBBBA) alongside evolving U.S. tariff policy and global trade dynamics.
The session challenged leaders to consider how timing, structure, and geographic footprint decisions can either unlock value or introduce unnecessary risk. For startups and middle-market biotech companies alike, the message was clear: proactive planning matters more than ever. Read on to explore key takeaways from this impactful discussion.
Key Tax Provisions for Life Science & Biotech Businesses
Bonus Depreciation
The OBBBA reinstates and permanently extends 100% first-year bonus depreciation for property acquired and placed in service after Jan. 19, 2025. For capital-intensive life science and biotech firms, this may significantly improve near-term cash flow. However, it’s essential to evaluate whether applying the deduction could result in a net operating loss, and businesses should note that numerous states do not conform to this federal provision.
Qualified Production Property Deduction
The introduction of the Qualified Production Property (QPP) deduction offers a powerful incentive for companies investing in manufacturing or production facilities. QPP is defined as real property used in the United States for manufacturing, production, or refining of a qualified product that results in a substantial transformation of the property comprising the product. The cost of QPP is eligible for a 100% deduction if construction begins after Jan. 19, 2025, and before Jan. 1, 2029, and the property is placed in service by Jan. 1, 2031.
Cost segregation studies are highly recommended to carve out portions of property not used for qualified activities or “mixed use” (i.e., offices, sales, parking lots).
Section 179 Expense Limitations
With higher expense limits and phase-out thresholds, Section 179 provides an alternative planning opportunity for companies operating in states that decouple from federal bonus depreciation. The OBBBA increases the annual expense limit from $1 million to $2.5 million. The phase-out amount, above which benefits must be reduced, is increased to $4 million. This change affects property placed in service after Dec. 31, 2024.
Research and Experimentation
The OBBBA permanently allows for the deduction of domestic research and experimental (R&E) expenses. Foreign R&E expenditures remain subject to capitalization and amortization over a 15-year period. Taxpayers still have the option to continue capitalizing R&E.
For life science and biotech leaders, proactive tax planning is essential to determine whether to deduct future costs and unamortized costs from prior years, which may be deducted in full in 2025 or ratably over 2025 and 2026. Timing these decisions correctly can materially affect taxable income.
Business Interest Expense Limitation
The OBBBA also permanently reinstates the section 163(j) interest deduction limitation using a calculation of income that excludes the deduction for depreciation, amortization, or depletion (EBITDA). This is effective for taxable years beginning after Dec. 31, 2024.
The shift provides more certainty for taxpayers regarding business interest limitations, potentially allowing for a larger deduction beginning Jan. 1, 2025. Life science and biotech companies should factor this expanded deduction into projections of taxable income, as previously disallowed carryover interest expense may now be usable.
U.S. Tariff Policy & Global Response
U.S. tariff policy continues to evolve as a tool for advancing economic and strategic objectives. The effects of expansion include universal tariffs on most imports, reintroduction of tariff exclusions for critical supply chain items, the de minimis exemption, and increased enforcement of valuation and origin compliance.
The global response has been equally strategic, with reciprocal tariffs, supplier shifts, and even slower customs clearance for U.S. goods becoming common. For life sciences companies reliant on precision manufacturing and time-sensitive imports, these frictions can quietly erode margins if left unaddressed.
Customs Valuation: Overview, Methods & Models
Customs valuation is the process of determining the dutiable value of imported goods to assess customs duties, ensure fair trade practices, and enforce trade compliance. The World Trade Organization and U.S. Customs & Border Patrol follow a strict hierarchy of valuation methodologies to determine the value declared for imported goods.
A subsequent valuation method can only be used if a set of facts and circumstances is established to prevent the application of higher, more accurate methods.
- Method 1: Transaction value
- Method 2: Transaction value of identical goods
- Method 3: Transaction value of similar goods
- Method 4: Deductive value
- Method 5: Computer value
First Sale Principle
The First Sale Principle (FSP) is a customs valuation model that allows importers to declare the value of goods based on the price paid in the first of a series of transactions leading up to the importation, rather than the final sale price.
When properly structured and documented, this approach can lower the declared customs value, resulting in reduced duties payable. However, FSP has several key components and requirements, including legal title transfer, mutually agreed contracts or agreements, no significant transformation, and proper recordkeeping.
Key Takeaway: Timing, Structure, and Foresight Drive Advantage
In summary, this session of the CBIZ New England Life Science & Biotech Summit reinforced a unifying theme: tax and trade changes reward companies that plan ahead. Whether evaluating capital investments, facility design, R&E strategy, or global sourcing models, leaders must move beyond reactive compliance and toward integrated planning.
CBIZ helps life sciences and biotech companies navigate a shifting regulatory landscape with integrated accounting, tax, advisory, benefits, insurance, and technology solutions.
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