Potential Restoration of R&D Tax Breaks Gains Momentum

Recent developments in the House and Senate highlight the ongoing efforts and indicate growing support for the restoration of Research and Development (R&D) tax breaks. Bills affecting R&D tax credits are under consideration in both chambers of Congress and have bipartisan support, see H.R.2673, S.314, and S.866. This past week, there was approval by the House Committee on Ways and Means for deliberation by the full House. The proposed bill would revert Section 174 to its prior state, allowing businesses to deduct all Research and Experimental (R&E) expenditures in the current year.

Further, last week during a House subcommittee hearing, several lawmakers, including Rep. Dan Meuser (R-Pa.), Chairman of the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access, Rep. Ron Estes (R-Kan.), and Rep. Beth Van Duyne (R-Texas), all co-sponsors of the American Innovation and Competitiveness Act (discussed in our recent blog), expressed their support for legislation that would permanently extend tax breaks for R&D costs that expired at the end of 2021. In addition, the Senate Committee on Finance and the Senate Committee on Small Business and Entrepreneurship held a joint roundtable discussion titled "Tackling Tax Complexity: the Small Business Perspective." During the roundtable, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Senate Small Business and Entrepreneurship Committee Chair, Sen. Ben Cardin (D-Md.) expressed bipartisan support for extending the expired tax breaks for R&D costs. Chairman Wyden added, "Our committee has a history of working on big issues in a bipartisan way. We understand the urgency here, and I believe we can get a balanced package this year."

If you have any questions on the impact of these updates on current and future tax filings, reach out to one of our experienced tax professionals today.