District of Columbia law fixes OBBBA decoupling for research, interest and depreciation

Law 26-189 is the Fiscal Year 2027 Budget Support Act of 2026. The Council’s official record states that it became effective on 2 October after completion of congressional review and was published in the District of Columbia Register on 16 October. The enrolled act had been enacted without the Mayor’s signature on 14 August. The publication is therefore the latest official stage, while the substantive rules use their own taxable-year periods.^[1][2][3]

Five-year research amortisation

For corporations, financial institutions and unincorporated businesses, the law amends D.C. Code section 47-1803.03 rather than simply following the federal One Big Beautiful Bill Act changes. For taxable years beginning after 31 December 2021 and before 1 January 2028, domestic research or experimental expenditure within Internal Revenue Code section 174A must be capitalised and deducted ratably over five years, starting at the midpoint of the taxable year in which the cost is paid or incurred.^[3]

The District also rejects the federal transition choices attached to section 174A. A taxpayer cannot use OBBBA section 70302(f)(1) to amend a return under the transition rules and cannot make the election under section 70302(f)(2). Groups should therefore maintain a separate District research-cost schedule where federal treatment produces immediate deductions or a different transition profile.^[3]

Interest limitation

Business-interest calculations also diverge. For taxable years beginning after 31 December 2024 and before 1 January 2030, District adjusted taxable income under section 163(j) is computed without applying section 163(j)(8)(A)(v). This preserves the District’s EBIT-style limitation instead of the restored federal depreciation and amortisation add-back. The enacted text separately disapplies the federal floor-plan-financing treatment under section 163(j)(9), so affected groups should not assume the federal interest-cap result carries into their District return.^[3]

Depreciation remains separate

The existing District prohibition on section 168(k) bonus depreciation remains, and Law 26-189 denies the new section 168(n) qualified-production-property allowance for taxable years beginning from 2025 through 2029. The District’s section 179 allowance remains limited to the lesser of $25,000 or the property’s actual cost. Multistate groups should update fixed-asset, interest and research-cost adjustments before filing or provisioning for the affected periods.^[3]