Member Action Needed on R&D Amortization

December 1, 2022

Member Action Needed on R&D Amortization

Since 1954, Section 174 of the federal tax code allowed businesses to deduct qualified research expenses in the year those costs were incurred. Congress created the related R&D tax credit in 1981.

As part of the Tax Cuts and Jobs Act of 2017, Congress changed how taxpayers write off R&D expenses. Starting on January 1, 2022, firms could no longer write off R&D expenses in the year they were incurred and now must amortize those expenses 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 to other countries that provide greater incentives for R&D.

There is bipartisan support for delaying this requirement but members of the House and Senate need to hear from constituents that fixing R&D amortization before the end of the year is a top priority.

Click here to access the ACEC Action Alert Center and urge Congress to fix R&D amortization.

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