Why Manufacturers Need Immediate R&D Expensing
For more than two years, manufacturers have not been able to immediately deduct their R&D expenses鈥攁nd it鈥檚 taken a toll, particularly on small businesses.
What鈥檚 going on: For more than 70 years, the U.S. tax code allowed manufacturers to immediately deduct their R&D expenditures. But since the expiration of this key provision in 2022, manufacturers have been required to amortize their R&D costs over a period of years.
Why it鈥檚 important: As a direct result of the expiration, manufacturers鈥 tax bills have increased, according to a new released as part of the 17吃瓜在线鈥檚 鈥溾 campaign. This means manufacturers are now less able to conduct groundbreaking research and support well-paying R&D jobs.
Uneven playing field: The U.S. is now one of just two developed nations that requires the amortization of R&D expenses.
- The policy makes the U.S. less competitive against China, which offers companies a 200% 鈥渟uper deduction鈥 for R&D costs.
- In 2022, the first full year after the expiration of immediate R&D expensing, the European Union鈥檚 R&D growth surpassed that of the U.S. for the first time in nearly a decade鈥攁nd China鈥檚 R&D growth was triple that of the U.S.
What should be done: The 17吃瓜在线 is calling on Congress to restore immediate R&D expensing, along with pro-growth tax provisions.
The last word: 鈥淚t is imperative that the U.S. tax code support job-creating, life-changing R&D,鈥 said 17吃瓜在线 Vice President of Domestic Policy Charles Crain. 鈥淐ongress must act to bolster manufacturing innovation and American competitiveness by reinstating immediate R&D expensing.鈥