Lawmakers reintroduce R&D expensing bill in Congress

A bipartisan group of lawmakers has reintroduced legislation to allow immediate expensing of research and development costs, all the way back to 2022 when the tax break expired.

The bill, known as the American Innovation and R&D Competitiveness Act, would eliminate the five-year amortization requirement for research and experimental expenditures, allowing continued expensing of them in the taxable years in which the expenditures are incurred. 

The Tax Cuts and Jobs Act of 2017 ended immediate expensing of R&D costs and required the costs to be amortized over five years, starting in 2022. Congress has made efforts in the past to repeal or delay the requirement, and it will have a chance again as Republicans put together a reconciliation bill to extend the expiring provisions of the TCJA while adding new tax breaks. Last year, Congress came close to extending the tax break through 2025 after the House passed the bipartisan Tax Relief for American Families and Workers Act, but the bill stalled in the Senate. 

The sponsors of the bill, Reps. Ron Estes (R-Kansas) and John Larson (D-Connecticut), introduced previous versions of their bill (when it was known as the American Innovation and R&D Competitiveness Act) in 2019 and 2023. 

“Research and development play an integral role in creating good-paying jobs across the country, especially as we work to strengthen our economic competitiveness,” Larson said in a statement Monday. “The 2017 tax law’s elimination of immediate R&D expensing has made it more difficult for businesses to invest in developing the technologies of the future, including small-business owners and engineers in my district.”

The bill has received support from industry groups such as the National Association of Manufacturers and the Association of Equipment Manufacturers.

“Research and development in the United States does more than just advance innovation, it provides good-paying jobs for Americans across the country and strengthens our nation,” Estes stated. “There is bipartisan support for immediate expensing of R&D costs because it’s good for the workforce and the economy, brings new products and services to the marketplace, and ensures that our country remains the leader in innovation around the world. For the past several years, U.S. job creators and innovators have been unable to immediately expense R&D costs in the year they occur, and as a result we’ve seen domestic research and development slow while other countries incentivize and benefit from expanded R&D. A significant number of workers, community leaders, businesses and lawmakers on both sides of the aisle agree that we must address R&D expensing this year.”