If your business invests heavily in research and development activities, you may face an unexpected surprise this year as you start planning for your 2022 tax filings. For almost 70 years, businesses have been able to deduct their R&D expenses immediately, incentivizing critical research investments. Starting this year, however, provisions from the 2017 tax law will require firms to amortize R&D investments over five years rather than deducting in the same year in which the costs are incurred. Unless reversed or delayed, this change will adversely affect the cash flow for businesses engaged in R&D, significantly impacting future funding for R&D and harming the United States’ global competitiveness.
Fortunately, there are legislative provisions that would reverse the R&D amortization rule for at least the next four years, giving us more time to adopt a permanent correction. The American Innovation & Jobs Act of 2023 (S 866) and the American Innovation and R&D Competitiveness Act of 2023 (HR 2673) are bipartisan bills which would restore the immediate deductibility of R&D expenses.
Please reach out to your legislators NOW to let them know that you SUPPORT S 866 and HR 2673.