Opinion
What does the One Big Beautiful Bill Act mean for Israeli tech?
"This legislation provides some great opportunities for Israeli tech companies to do business in the U.S.," writes Meital Stavinsky.
The One Big Beautiful Bill Act was passed by Congress following a dramatic vote last week. President Donald Trump signed the legislation into law on July 4th, United States’ Independence Day. This landmark legislation is the product of months of intensive negotiations and strategic legislative maneuvering, marking a major victory for President Trump's second-term domestic agenda. This bill will reshape U.S. federal policy across nearly every major sector of the American economy through significant policy shifts, funding reallocations, and regulatory changes as one of the most consequential pieces of legislation in recent congressional history.
Corporate America has much to benefit from the bill that increases the cap on state and local tax deduction, restores the ability to permanently deduct domestic research or experimental expenditures, deducts the cost of building new manufacturing facilities, and incentivizes chipmaking in America.
For foreign corporations owned by U.S. shareholders, the bill reforms the global intangible low-taxed income regime and renames it “Net Controlled Foreign Corporation tested income”. The modified regime repeals the exemption for income below the 10% deemed return on “qualified business asset investments” (QBAI). It increases the effective tax rate to 14%, eliminates most expense apportionment other than direct expenses, and reduces Foreign Tax Credit limitation to a 10% haircut. Similarly, the bill revises foreign derived intangible income by eliminating QBAI, providing a 14% rate for income earned from exports. The bill extends the ability to offset the base erosion and anti-abuse tax (BEAT) with specified tax credits (e.g., research credit, low-income housing credit). On international wire transfers, the bill imposes a 1% excise tax on all remittance senders of money. This does not apply when withdrawn from an account at a financial institution or funded by a U.S. debit or credit card.
Israeli DefenseTech companies stand to gain from significant funding increases for strategic capability areas within the U.S. Department of Defense (DOD) and National Nuclear Security Administration. The bill includes more than $150 billion in funding focused on enhancing military capabilities, strengthening the defense industrial base, improving military readiness, and enhancing deterrence against near-peer competitors. Should Congress pass a full-year funding bill for fiscal year 2026, the additional investment included in the reconciliation bill would put the total DOD budget at over $1 trillion for the first time in history. Among other allowances, the bill provides $29 billion for shipbuilding, $25 billion for Golden Dome, $25 billion for munitions, $16 billion to accelerate innovative technologies (such as drones, AI and low-cost weapons), $15 billion for nuclear modernization, $12 billion for Indo-Pacific deterrence requirements, $16 billion to enhance DOD resources for improving readiness and addressing maintenance backlogs, $9 billion for air superiority, $1 billion for improving border security operations, and $380 million for technologies to improve DOD efficiency and cybersecurity capabilities.
In the clean energy tech industry, the bill scales back clean‑energy tax incentives, speeds up phaseouts for certain energy credits, and tightens domestic content rules and foreign‑entity restrictions. Though the bill limits the window for solar and wind projects to claim tax credits, batteries, electric generating technologies and other clean energy technologies such as hydrogen, fuel cells, geothermal, hydroelectric and nuclear remain eligible for current tax credits, provided the project begins construction by the end of 2033, after which a three-year phaseout begins before the credits expire in 2036. The bill amends the U.S. Department of Energy (DOE) loan program to fund traditional energy projects, critical mineral and grid reliability projects that advanced American energy dominance, and appropriates $1 billion to the revised program.
On water infrastructure, the bill appropriates $1 billion to the U.S. Department of Interior for the construction and related activities that restore or increase the capacity or use of existing water conveyance and storage facilities constructed by the U.S. Bureau of Reclamation.
Though the bill imposes cuts and limitations on certain noncitizens’ access to federal healthcare programs, it establishes a program called the Rural Health Transformation Program that will provide $50 billion to hospitals and other providers over five years. To qualify for funding, states must submit a rural health transformation plan end of 2025 outlining how the plan will improve access to care, patient outcomes, and the long-term success and financial viability of rural hospitals, focusing on leveraging technology including remote monitoring, AI, and other solutions.
This legislation provides some great opportunities for Israeli tech companies to do business in the U.S. However, companies ought to make sure to consult with professional advisors in both Israel and the U.S. to ensure they have the required corporate structure and tax planning in place to pursue these opportunities, as well as timely address its challenges.
Meital Stavinsky is a Partner and Co-Chair of the Israel Practice of Holland & Knight, a leading U.S.-based law firm.
