New tax policy opens the best window for AI investment

The following is a guest post by Armanino partner Dean Quiambao, and the views expressed are solely those of the author.

Legacy systems were not designed for the AI era. CFOs widely recognize the potential value of AI-enhanced systems, but tight budgets and tax law limitations have long hindered most enterprises from advancing the necessary modernization. This situation took a turn on July 4th—President Trump signed the One Big Beautiful Bill Act.

This comprehensive tax and spending bill restores 100% bonus depreciation, expands Section 179 expensing limits, and eliminates the capitalization and amortization requirement for domestic R&D expenditures. The direct result is a significant improvement in the return on investment for AI-enabled investments. Businesses can now fully deduct domestic R&D expenses in the year they are incurred; hardware expenditures tied to AI projects are once again eligible for full deductions; and even internal initiatives such as upgrading enterprise software systems or customizing digital workflows enjoy favorable treatment under the new rules. For the first time in years, tax law and technology roadmaps are aligned.

This change is critical because, in my experience, operational barriers are often the biggest obstacle to AI implementation. Too many businesses run on infrastructure that was never designed for machine learning, intelligent automation, or advanced data modeling. While finance teams understand the strategic value of transformation, they have long lacked the budget flexibility to prioritize it. As a CFO, have you ever weighed the decision to migrate off a legacy ERP platform or upgrade server infrastructure, yet struggled to build a compelling financial case? Now is the time to act.

The biggest difference from the past lies in the immediacy of the benefits. Previously, investments in software development or AI implementation had to be capitalized and amortized over multiple years, meaning businesses bore the costs upfront while tax benefits were only realized gradually over time. With the restoration of full deductions for domestic R&D expenditures, if you are building internal AI capabilities, training digital workers, or developing proprietary automation processes, you can write off these expenses in real time—this fundamentally changes the cash flow narrative.

Hardware investments are also showing signs of recovery. With bonus depreciation restored to 100%, businesses have greater incentive to upgrade on-premises systems, invest in IoT devices, or build the physical infrastructure that supports their data strategies. Even if you rely on third-party partners or managed data centers, these investments are now easier to justify financially.

For businesses that need to retrain employees or restructure workflows during AI rollout, many states also offer additional incentives. For example, Georgia has a retraining tax credit program; California and New Jersey also have similar mechanisms that can be layered on top of federal rules.

The key takeaway is this: your AI roadmap may be no different than it was before July 4th, but your ability to fund it has significantly improved. This is crucial because delaying transformation exacerbates what I call "tax-anchored technical debt"—you continue to incur costs in systems that cannot scale. If you do not take deductions now, you will fall behind on both the technology and financial fronts.

Of course, tax should not dominate strategic decisions. You should not invest in AI merely because it is deductible. But if you are already thinking about scaling automation or building smarter infrastructure, now is an unprecedented opportunity to act.

No one knows how long this window will last. Policies will change, incentives will expire, and economic priorities will evolve. But for now, the alignment between tax law and digital strategy is exceptionally clear. If you have been waiting for the right time to modernize—it is now, do not miss it.