The United States remains one of the most attractive global destinations for foreign investors, particularly in real estate and business expansion. Under the current political climate, 2026 should be no exception. The U.S. market continues to offer stability, strong legal protections, and long-term growth opportunities. However, foreign individuals and businesses must navigate a uniquely complex U.S. tax and regulatory system. This executive summary provides a tailored overview of the essential tax concepts, investment structures, and compliance requirements foreign investors should understand before entering the U.S. market.

Foreign investors are taxed on U.S.-sourced income, with the tax treatment determined by whether the income is characterized as Effectively Connected Income (ECI) or Fixed, Determinable, Annual, or Periodical (FDAP) income. ECI is tied to an active U.S. trade or business and taxed at graduated rates, while FDAP income—such as interest, dividends, and certain rents—is generally subject to a 30% withholding rate unless reduced by tax treaties. Understanding these distinctions helps foreign investors structure their activities efficiently.

U.S. real estate investments by foreign persons trigger additional tax rules under the Foreign Investment in Real Property Tax Act (FIRPTA). When foreign investors dispose of U.S. real property or interests in real-estate-focused entities, FIRPTA generally requires a 15% withholding on gross proceeds. Proper structuring and advance planning can significantly reduce withholding exposure, ensure compliance, and help manage long-term U.S. tax obligations.

The design and selection of a structure through which to invest in the U.S. is a critical decision for foreign investors. Common choices include C-Corporations, LLCs, and branch operations. Each structure offers different benefits in terms of liability protection, confidentiality, tax obligations, and administrative requirements. Many foreign investors use a U.S. corporation (often Delaware) as a ‘blocker’ entity to simplify compliance and reduce direct exposure to U.S. taxation.

Foreign investors must comply with extensive U.S. reporting requirements, including obtaining an Employer Identification Number (EIN), completing IRS Forms W-8, filing tax returns such as Forms 1040NR or 1120-F, and meeting state-level tax obligations.  And, if U.S. business entities are established, U.S. entity-level reporting requirements such as federal Forms 1120 and 1065, various federal withholding forms to report U.S. source payments made to foreign persons, state and local specific forms, and many others may also apply.  Opening a U.S. bank account, for example, typically requires identity verification, formation documents, and coordination with a registered agent. Understanding these requirements early helps avoid delays and penalties.

Foreign-owned businesses expanding into the U.S. must carefully plan entity selection, incorporation, tax registrations, payroll and sales tax responsibilities, and ongoing compliance. With proper planning and professional guidance, foreign investors can establish a strong foundation for long-term growth and maximize investment returns while minimizing U.S. tax exposure.

Haskell & White LLP is a premier full-service independent accounting and business advisory firm serving middle-market companies who own assets or operate business throughout the  United States.  Founded in 1988 and headquartered in Irvine with an additional office in San Diego, the firm delivers national-firm caliber expertise paired with highly personalized service.  Members of Haskell & White’s international tax services group come from Big Four backgrounds, enabling Haskell & White to provide foreigners with comprehensive and thorough knowledge about the U.S. federal and state income tax consequences of structuring their investment and operating in the U.S. 

If your business invests in research and development (R&D), the One Big Beautiful Bill Act (OBBBA) has brought a welcome change — and some important elections to make by July 3, 2026.  

For certain small businesses, OBBBA allows Research Expenses to be fully deducted in the year they’re incurred, reversing the five-year capitalization and amortization requirement that’s been in place since 2022. This change can free up valuable cash flow — but let’s review timing, eligibility and other considerations.  

The most obvious winners are businesses that have claimed Research Expenditures expenses in the past and qualify as a “small business” which is defined as average annual gross receipts under $31 million over the past three years. The benefit isn’t just retroactive — businesses planning R&D in 2025 and beyond should also take note, as the bill does not specify an end date making this change permanent unless new legislation is passed. 

Businesses which are not “eligible small businesses” are allowed to accelerate unamortized domestic R&D deductions over one or two years. 

The industries below often have qualifying R&D costs: 

Every business is different, but the key is to act now — OBBBA’s provisions are in effect, and the one-year window to elect this new R&D treatment closes July 4, 2026. Review your R&D activities, strengthen your documentation, and choose the strategy that works best for you. We recommend acting well before the deadline, so your CPA has time to evaluate your options, prepare any amendments, and secure the full benefit before schedules fill up. 

If you think your business might benefit from these changes — or if you’re unsure — let’s talk. As tax advisors, our role is to help you navigate these opportunities and make informed decisions that align with your broader business goals. 

The newly signed tax legislation—officially titled the “One Big Beautiful Bill Act” (OBBBA)—brings sweeping changes to the tax code. Our tax planning team is actively analyzing the provisions that matter most to our clients because no two tax situations are alike. Whether you’re an individual taxpayer, a business owner, or an investor, there may be planning opportunities—or urgent decisions—you should consider now.

Should you buy that electric vehicle this year? Do you need to revisit your estate plan or business structure? We’ve outlined key highlights below to help you start thinking strategically.

The Act makes this deduction permanent. It also sets a minimum deduction for active QBI for “applicable taxpayers” at $400; defines an applicable taxpayer as one whose aggregate QBI for all active qualified trades or businesses for the tax year is at least $1,000; and establishes inflation adjustments for the new minimums starting in post-2026 tax years. Also, the phase-in amounts are increased from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers.

The OBBBA permanently restores the 100% first-year depreciation deduction for eligible assets acquired after January 19, 2025. This is up from the 40% bonus depreciation rate for most eligible assets before the OBBBA.

The law allows additional 100% first-year depreciation for the tax basis of qualified production property, which generally means nonresidential real property used in manufacturing. This favorable deal applies to qualified production property when the construction begins after January 19, 2025, and before 2029. The property must be placed in service in the United States or one of its possessions.

For eligible assets placed in service in taxable years beginning in 2025, the OBBBA increases the maximum amount that can be immediately written off to $2.5 million (up from $1.25 million before the new law). A phase-out rule reduces the maximum deduction if, during the year, the taxpayer places in service eligible assets in excess of $4 million (up from $3.13 million). These amounts will be adjusted annually for inflation starting in 2026.

The OBBBA allows taxpayers to immediately deduct eligible domestic research and experimental expenditures (R&E) that are paid or incurred beginning in 2025 (reduced by any credit claimed for those expenses for increasing research activities). Before the law was enacted, those expenditures had to be amortized over five years. Small business taxpayers can generally apply the new immediate deduction rule retroactively to tax years beginning after 2021. Taxpayers that made R&E expenditures from 2022–2024 can elect to write off the remaining unamortized amount of those expenditures over a one- or two-year period starting with the first taxable year, beginning in 2025.

For tax years after 2024, the OBBBA permanently restores a more favorable limitation rule for determining the amount of deductible business interest expense. Specifically, the law increases the cap on the business interest deduction by excluding depreciation, amortization and depletion when calculating the taxpayer’s adjusted taxable income (ATI) for the year. This change generally increases ATI, allowing taxpayers to deduct more business interest expense.

Eligible gains from selling qualified small business stock (QSBS) can be 100% tax-free thanks to a gain exclusion rule. However, the stock must be held for at least five years and other eligibility rules apply. The new law liberalizes the eligibility rules and allows a 50% gain exclusion for QSBS that’s held for at least three years, a 75% gain exclusion for QSBS held for at least four years, and a 100% gain exclusion for QSBS held for at least five years. These favorable changes generally apply to QSBS issued after July 4, 2025.

The OBBBA makes permanent an unfavorable provision that disallows excess business losses incurred by noncorporate taxpayers. Before the new law, this provision was scheduled to expire after 2028.

The advanced manufacturing investment credit (also known as the semiconductor credit or the CHIPS credit) on qualified investments in an advanced manufacturing facility built before Jan. 1, 2027 is increased to 35% (up from 25%) for property placed in service after 2025.

The OBBBA terminates a host of energy-related business tax incentives including:

The Act makes the lower individual income tax rates and wider tax brackets introduced by the Tax Cuts and Jobs Act “TCJA” permanent, preventing a scheduled tax rate increase after 2025. For example, the top individual rate will remain at 37% (instead of reverting to 39.6%), and the marriage penalty relief for most brackets continues. This means that married couples filing jointly will typically not face higher taxes compared to filing as singles.

The basic exclusion amount for federal estate and gift tax will increase to $15 million (indexed for inflation) for estates of decedents dying and gifts made after Dec. 31, 2025. Review and update estate plans and consider making large lifetime gifts to take advantage of this higher exclusion.

The SALT deduction limitation is raised from $10,000 to $40,000 ($20,000 for married filing separately) beginning in 2025 through the 2029 tax year. After that, the limitation will return to $10,000 ($5,000 for married filing separately). The deduction phases down for taxpayers with modified adjusted gross income over $500,000 ($250,000 for married filing separately).  

This tax update highlights key changes most likely to affect our clients—both businesses and individuals. Rather than provide a laundry list of every provision, we’ve focused on the developments that matter most for planning ahead. While some changes are permanent and will remain in effect unless new legislation is introduced, others are set to phase out in the coming years, making proactive tax planning more important than ever.

If you have questions about how these changes may impact your current tax planning situation or future plans, contact your Haskell & White Tax Team.