On January 31, the House passed legislation to restore the immediate expensing of R&D expenses. The Biotechnology Innovation Organization (BIO) has long advocated for this change.
Until 2022, research and development expenses were 100% tax deductible each year. However, the Tax Cuts and Jobs Act of 2017 required companies to amortize domestic expenditures over five years, and international expenditures over 15 years.
The $78 billion Tax Relief for American Families and Workers Act, passed yesterday, would reverse the change and reinstate R&D expensing. R&D expenses would be 100% deductible through 2025.
“This bill restores full R&D expensing, interest deductibility, and 100% expensing,” said House Ways and Means Chair Jason Smith (R-MO), the bill’s sponsor, on the House floor. “Each of these policies will help American businesses grow, create jobs, and sharpen their competitive advantage against China. This will create over $70 billion in new R&D investment and over 900,000 new jobs, increase small business investment by $400 billion, and generate $58 billion in additional take-home pay for American workers.”
“Today, America’s small businesses are being pummeled by high prices and interest rates,” he continued. “This package raises the expensing cap for small businesses beyond the limit set in the 2017 tax reform.”
Click here to read more via bio.news.