One of the many tax changes proposed by President-elect Donald Trump is to expand the Section 174 deduction for R&D expenditures. Under the Tax Cuts and Jobs Act (TCJA), R&D expenditures paid or incurred beginning in 2022 must be capitalized and amortized over five years for domestic R&D and over 15 years for foreign R&D. Before the TCJA, businesses could immediately deduct R&D expenses in the year they were incurred. There’s bipartisan support for removing this TCJA provision and again allowing an immediate R&D deduction in the year expenses are incurred. Trump has said he wants to expand R&D tax breaks but hasn’t elaborated on what that will entail.
Our Blog 