Starting on January 1, 2022, Congress changed how firms write off R&D expenses. Previously those expenses could be deducted in the year they were incurred, but now they must be amortized over five years in most cases.
Amortization of R&D expenses will cause significant cash flow problems for engineering firms and create a disincentive for investment in innovation. It will also place the U.S. at a competitive disadvantage compared to other countries that provide greater incentives for R&D.
ACEC and its coalition allies built significant support last year for legislation to repeal this requirement, but Congress couldn’t come to agreement on this and other pending tax issues. The R&D legislation is being reintroduced in the new Congress and members of the House and Senate need to hear from constituents asking them to cosponsor this critical initiative.
ACEC provides this convenient link to Contact Your Representative and Senators.
