Congress Reintroduces R&D Competitiveness Act of 2025: Tax Impact and Industry Implications
March 31, 2025
On March 10, 2025, a bipartisan coalition of lawmakers brought the American Innovation and R&D Competitiveness Act of 2025 back to the floor of the U.S. House of Representatives. This legislation aims to restore the immediate deductibility of research and experimental (R&E) expenditures, reversing the amortization requirement imposed by the 2017 Tax Cuts and Jobs Act (TCJA).
Key Provisions of the Act
The proposed bill includes several significant provisions designed to boost U.S. competitiveness on the global stage:
- Restoration of Immediate Expensing: The bill eliminates the mandatory five-year amortization requirement, reinstating the ability of businesses to deduct R&E costs immediately.
- Optional Amortization: Taxpayers may elect to amortize certain R&E expenses over at least 60 months if they choose.
- Retroactive Application: The amendments apply to tax years beginning after December 31, 2021, effectively reversing the TCJA’s amortization requirement.
Economic and Industry Impact
The potential reinstatement of immediate R&D expensing would have significant positive effects on the U.S. economy, particularly in industries heavily reliant on innovation, such as technology, pharmaceuticals and manufacturing. By reducing the tax burden on businesses, the legislation encourages greater investment in research, fostering technological advancements, job creation and long-term economic growth.
Conclusion
The American Innovation and R&D Competitiveness Act of 2025 represents a bold move to restore the immediate deductibility of R&E expenditures, providing a much-needed boost to U.S. businesses and the economy. As lawmakers continue to debate the bill, its potential impact on future tax filings and industry growth remains a hot topic. Stay tuned for further updates as this legislation progresses through Congress.