Sponsors
The bill trades reduced taxpayer subsidies and reliance on adversary-controlled technology (improving national security) for higher after-tax costs for affected businesses, greater compliance uncertainty, potential harm to cross-border investment, and a risk of unintentionally sweeping in benign products.
Taxpayers: Denies bonus depreciation, R&E expensing, and R&D credit for technology tied to foreign adversary-controlled sources, reducing taxpayer-subsidized support for such technologies.
Taxpayers and tech workers: Removes tax incentives for acquisition/use of foreign adversary-controlled ICT, discouraging reliance on potentially risky foreign technology and improving national security posture.
Taxpayers and financial institutions: Requires Treasury rulemaking to define attributable items and implement exclusions, which can create clearer compliance rules and greater enforcement transparency over time.
Small business owners, companies, and taxpayers: Affected businesses will lose bonus depreciation, R&E expensing, and R&D credits, raising after-tax costs and potentially reducing investment and hiring.
Taxpayers, financial institutions, and tech firms: New definitions and Treasury rulemaking will create compliance costs and planning uncertainty as businesses determine whether products are covered or interoperable.
Small business owners and companies with foreign partners: Excluding income/deductions and denying credits for targeted technology could deter cross-border investment, complicate transactions, and harm international collaborations.
Based on analysis of 2 sections of legislative text.
Denies bonus depreciation, certain R&E expensing, the R&D credit, and interest allocation benefits for taxpayers tied to defined "foreign adversary-controlled technology" or prohibited foreign entities.
Introduced February 11, 2026 by Nathaniel Moran · Last progress February 11, 2026
Makes changes to the federal tax code to block favorable tax treatment for taxpayers that acquire, use, or are owned by entities tied to defined "foreign adversary-controlled technology." It adds a new definition to the Internal Revenue Code, removes bonus depreciation and certain R&D tax benefits for affected property and activities, excludes related items from adjusted taxable income for interest limitation rules, and directs the Treasury to issue implementing regulations. The changes apply to taxable years beginning more than one year after enactment.