Case Studies
Massachusetts Decouples on Key R&D Deductions: What Businesses Need to Know
Massachusetts will no longer follow certain transition rules under the One Big Beautiful Bill for R&D expense deductions, affecting businesses with expenses paid between 2022–2024.
By NomadicTax Research Team • 5-8 min read • September 15, 2026
## What’s Changing in Massachusetts (
Sub-Region Note: Massachusetts)
Massachusetts has formally adopted **Technical Information Release 26-4 (TIR 26-4)**, clarifying how the state will conform—or **not conform**—to certain provisions of **Public Law 119-21**, also known as the One Big Beautiful Bill Act (OBBBA). The changes were published June 23, 2026 and impact corporate and income tax purposes. ([mass.gov](https://www.mass.gov/technical-information-release/tir-26-4-massachusetts-conformity-to-certain-provisions-in-public-law-no-119-21?utm_source=openai))
### Key Decoupling & Decideried Differences
- **R&D (domestic research and experimental) expenses** paid or incurred between **January 1, 2022 and January 1, 2025** must be **amortized over 5 years** under state law—*even if* federal law allows more favorable treatment or transition rules under P.L. 119-21. ([mass.gov](https://www.mass.gov/technical-information-release/tir-26-4-massachusetts-conformity-to-certain-provisions-in-public-law-no-119-21?utm_source=openai))
- Qualified Opportunity Zone rules under IRC § 1400Z-2: Massachusetts does **not** adopt federal renewals and modifications for taxable years 2025–2026. Investments in zones not in Massachusetts will require add-backs. ([mass.gov](https://www.mass.gov/technical-information-release/tir-26-4-massachusetts-conformity-to-certain-provisions-in-public-law-no-119-21?utm_source=openai))
## Impact & Considerations for Businesses
- Businesses with R&D spend during 2022–2024 need to amend projections—corporate tax filings in Massachusetts must reflect **amortization**, not immediate deduction. This can increase taxable income in earlier years.
- Investors in Opportunity Zones should verify that their investments are entirely within Massachusetts **if** they want state-level tax benefits. Investments outside the state lose exclusion under state law. ([mass.gov](https://www.mass.gov/doc/2025-form-m-990t-62-instructions/download?utm_source=openai))
- Underpayments or late filings for 2025 tax year may be eligible for **relief** if obligations are tied to the state’s conformity to federal OBBBA provisions. Specific schedules and disclosure statements are required. ([mass.gov](https://www.mass.gov/doc/2025-form-m-990t-62-instructions/download?utm_source=openai))
## Practical Examples
1. **Tech Startup**: Incorporated in Massachusetts; $200,000 of R&D expended in 2023. Under federal law, amortization or immediate expensing (depending on rules) may be favorable—but for Massachusetts filings, that $200,000 must be spread over five years beginning 2022.
2. **Opportunity Zone Investor**: Jane invests in an OZ fund with projects in Texas. Even though federal benefits apply, for MA tax return she must **add back** any exclusion claimed due to project being outside the state.
## Action Steps for Businesses
- Adjust **tax planning and cash flow models** to account for increased taxable income earlier than expected.
- Ensure tax software or preparers are updated with **Massachusetts’ non-conformity rules** under TIR 26-4.
- For 2025 returns, attach required schedules (M-2210F, TDS disclosures) if applying for penalty relief due to the conformity lag. ([mass.gov](https://www.mass.gov/doc/2025-form-m-990t-62-instructions/download?utm_source=openai))
- Monitor whether further state legislation bridges gaps between federal and state treatments.
Massachusetts’ deviation from federal norms underlines the importance of checking both state and federal tax laws in tandem—especially for deductions like R&D and OZ investments that often cross boundaries.