The Diligent Observer Podcast Special Episode: What Does the Big Beautiful Bill Mean for Angel Investors?
On July 4, 2025, Trump’s “Big Beautiful Bill” was signed into law.
Here are the takeaways for angel investors.
The Good News
- R&D expenses can now be deducted immediately instead of spreading over five years. Example: portfolio company spends $1M on research, they get the full tax benefit upfront rather than spreading out $200K annually. This is huge cash flow impact for software, deep tech, and biotech companies.
- Qualified Small Business Stock (QSBS) exclusion got a serious upgrade. Shareholders can now exclude up to $15M in gains per company (up from $10M), and don't need to wait the standard five years to receive benefit. Holding for three years now yields a 50% tax exclusion, and four years gets 75%. More companies qualify too - the asset limit jumped from $50M to $75M.
The Concerning Stuff
- International talent just got significantly more expensive to bring to the US. If founders are planning to relocate overseas hires, budget a few extra percentage points per head.
- Clean tech investors are facing a rough 6-48 months as credits for EVs, solar, wind, and clean hydrogen etc get phased out. If you're invested in this space, consider giving your founders some TLC because they’re definitely not getting it from this administration.
- University endowments are getting hit with additional taxes, which may choke VC capital flow. Since angels often co-invest alongside VCs, I expect a tighter funding environment for follow-on rounds.
Bottom Line
This is generally positive for most angels, the major exception being clean tech investors. The QSBS changes alone could save hundreds of thousands on exits, and the R&D benefits could make deep tech more attractive. Just be ready for a potentially tougher institutional funding environment ahead.
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All opinions are personal and may not reflect the views of The Diligent Observer. Not investment advice.