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NEWS | R&D Amortization Provisions Providing Bipartisan Forum in Congress

“We’ve got some common ground we’d like to find. …We’re open to the R&D tax credit….”

Yesterday, the House Ways and Means Committee marked up several bills, including H.R.3937, the Small Business Jobs Act.

This bill, along with its counterparts, the Tax Cuts for Working Families Act (H.R.3936), and the Build It in America Act (H.R.3938), represent the latest step in House Republicans’ efforts to craft economic policy legislation this Congress.

Included in the language are several provisions that would help small business: reinstate the ability to immediately deduct Research and Development (R&D) costs; increasing the reporting threshold for subcontract labor; expanding tax incentives to investors who invest in S-Corps; and full expensing for the cost of equipment, machinery, and vehicles, staving-off a planned reduction to just 80 percent.

Specifically, the R&D provisions would reverse a provision in the 2017 Tax Cuts and Jobs Act, which became effective in 2022, requiring small businesses to amortize R&D investment deductions over five years, rather than being able to deduct them as an expense in the year that they are made. The ability to immediately deduct R&D expenses is especially important for small firms, many of which are early-stage high-growth companies.

After lengthy debate, the bills passed were passed by the committee and are likely to help form the base for negotiations over bipartisan economic priorities later in the year.

Notably, while these bills were reported out on party lines, Ways and Means Ranking Member Richard Neal (D-Mass.) signaled that Democrats were open to consideration of some of these provisions, and specifically singled out the R&D language:

“My friend I think sincerely said he’d like to find some common ground. We’ve got some common ground we’d like to find… We’re open to some suggestions. We’re open to the R&D tax credit…,” stated Rep. Neal.

NSBA looks forward to working with lawmakers—Republicans and Democrats alike—to ensure that easing the small-business tax burden is a top priority, both when it comes to easing the financial tax burden as well as easing complexity.

Check back here for the latest on these developments as NSBA continues tracking this important issue on the Hill.


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