U.S. Sen. Todd Young (R-IN) on May 8 sponsored a bill that would extend and make permanent an expired provision from the Tax Cuts and Jobs Act that allowed small businesses and startups to fully expense research and development (R&D).
“The United States is locked in a competition to ensure we maintain our position as the global leader in scientific and technological innovation,” Sen. Young said. “Our legislation would incentivize job-creating R&D activity in the United States — particularly among startups — to drive our innovation future, strengthen international competitiveness, and protect our national security.”
Sen. Young introduced the bipartisan American Innovation and Jobs Act, S. 1686, alongside 35 original cosponsors, including U.S. Sens. Maggie Hassan (D-NH), Steve Daines (R-MT), Thom Tillis (R-NC), Shelley Moore Capito (R-WV), Deb Fischer (R-NE), Jerry Moran (R-KS), and Roger Wicker (R-MS).
If enacted, S. 1686 also would permanently restore full expensing of R&D costs while allowing businesses to retroactively take advantage of the deduction for the tax years during which full expensing had expired, according to a bill summary provided by Sen. Young’s staff.
“As many small businesses struggle with rising costs, this bipartisan legislation cuts taxes for small businesses that invest in innovation, which will also help the United States continue to outcompete our adversaries like China,” said Sen. Hassan, the lead original cosponsor of S. 1686.
Additionally, the bill would expand support for innovative startups by doubling the cap on the refundable R&D tax credit from $250,000 to $500,000, and ultimately raising it to $750,000 over 10 years, and expand the number of startups eligible to use the refundable R&D credit by increasing the eligibility threshold from $5 million to $15 million in gross receipts, the summary says.
The legislation is endorsed by the R&D Coalition, which includes companies and trade associations such as the Business Roundtable, the National Association of Manufacturers, the Information Technology Industry Council, and the U.S. Chamber of Commerce.