Learn more about the reintroduction of the American Innovation and R&D Competitiveness Act.
On March 10, 2025, Reps. John B. Larson (D-CT), Ron Estes (R-KS), Suzan DelBene (D-WA), and Rudy Yakym (R-IN) have reintroduced the American Innovation and R&D Competitiveness Act (the bill), with support from 64 original cosponsors. The bill has received substantial bipartisan support and would permanently allow for the immediate expensing of research and development costs retroactively to 2022, when the provision from the Tax Cuts and Jobs Act of 2017 expired.
Since 1954, the U.S. tax code has provided businesses the option to deduct research and development expenses in the same year in which they were incurred or to amortize them over a period of up to 60 months. However, the Tax Cuts and Jobs Act of 2017 substantially amended Section 174, requiring taxpayers to amortize all research and experimental expenses over a five-year period for domestic costs and over 15 years for foreign costs for tax years beginning after December 31, 2021.
Highlights from the bill include the elimination of Section 174 amortization and the retroactive restoration of provisions allowing taxpayers to fully deduct R&D costs when incurred. The bill would exclude any expenditures related to the acquisition or improvement of land, property improvements, or exploration expenses related to minerals, oil, and gas.
Although bipartisan support for the bill is certainly a reason for optimism, only time will tell if a limited-scope tax bill can make it through Congress or if it will have to wait to be included as a part of larger tax reform.
If you have questions regarding the impact of the American Innovation and R&D Competitiveness Act, please contact a member of the Schneider Downs Credits and Incentives Team at [email protected].
About Schneider Downs Tax Services
Schneider Downs’ tax advisors have experience and expertise in a wide range of industries, including Automotive, Construction, Real Estate, Manufacturing, Energy & Resources, Higher Education, Not-for-profits, Transportation and others. Our industry knowledge and focus ensure the delivery of technical tax strategies that can be implemented as practical business initiatives.
To learn more, visit our dedicated Tax Services page.
