What is likely the most significant legislative item of 2025 is on the move through the US Congress, after the House of Representatives narrowly passed HR 1, the “One Big Beautiful Bill Act.”
The legislation – focused on tax and spending issues – now heads to the Senate for consideration, where further changes will be made. There are important technology policy issues within HR 1 that BSA is actively following as the legislation progresses. Key issues include:
Expanded Research and Development (R&D) Tax Credit
BSA has urged Congress to restore full, immediate deductibility of R&D expenditures, as was the law for almost 70 years. HR 1 takes a great step toward this goal by restoring immediate expensing of domestic R&D for five years, a development important to enterprise software companies which make some of the most significant R&D investments of any US industry.
Restoring full, immediate, and permanent expensing would strengthen US competitiveness and promote innovations in spaces like artificial intelligence (AI) and quantum computing. It also means keeping the US the most attractive place to invest in innovation, especially as governments in Europe, China, Canada and others offer generous R&D incentives.
BSA will continue to advocate for this priority, which enjoys broad bipartisan support, as the Senate considers HR 1.
Resources to Support IT Modernization
HR 1 allocates $500 million to the Department of Commerce to support the deployment of commercial AI solutions to modernize federal IT systems, a welcome step to promote AI adoption by government and facilitate better public services.
BSA has urged US policymakers to leverage the power of commercially available software and AI across government. In a recent op-ed, BSA’s Senior Director of IT Modernization and Procurement Jessica Salmoiraghi outlined how modernizing IT gives the government access to the best tools on the market.
A Pause on State AI Laws?
One closely observed provision within HR 1 calls for a 10-year pause on US states’ enforcement of laws regulating AI models or automated decision systems. The provision faces some procedural obstacles in the US Senate that could remove the so-called “moratorium” from any final version of the legislation.
Last week, I spoke to MLex about the possibility of Congress trying to block state AI laws from taking effect. The proposal seeks to prevent a potential worst-case scenario in which states pass conflicting and unworkable AI laws that create confusion or even inadvertently discourage overall AI adoption in industries across the economy. Whether the provision makes it into the final law, the legislation has elevated the idea of a pause on state AI regulation further into public debate.
What’s Next: Expect Change
There is still much work ahead before HR 1 ever becomes law, and it seems safe to bet on continued changes to the “Big Beautiful Bill” as the Senate works through its own legislative process. Senate leaders are working toward a tentative July 4 deadline to pass the bill through the upper chamber.
BSA will continue to monitor these provisions and other developments as the debate unfolds.
