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IN PROGRESS

Legislation to Restore Tax Breaks for R&D Fails as part of a Larger Tax Package

The U.S. Senate failed to advance legislation that would have restored previous rules for the deduction of qualified expenses for Research and Development (R&D). This measure was included in a larger tax package entitled the Tax Relief for American Families and Workers Act of 2024 H.R. 7024) that , also would have expanded the Child Tax Credit, addressed bonus depreciation, and extended disaster-related tax relief.  Previously, the federal government allowed businesses to deduct qualified research expenses in the same year and Congress created the Research and Development (R&D) tax credit in 1981. However, the Tax Cuts and Jobs Act of 2017 changed the deduction process for R&D expenses. As of January 1, 2024, most R&D expenses must be amortized over a five-year period.  The large tax package, H.R. 7024, which would eliminate the five-year amortized procedures for R&D, passed overwhelmingly in the House of Representatives 357-70. However, the U.S. Senate could not advance the legislation with the necessary 60 votes needed to move forward before the August recess 48-44.  The bill is expected to come up for a vote again before the end of the year.