Before the Tax Cuts and Jobs Act limited the deductibility of research and experimentation (R&E) expenses in 2022, businesses could deduct them in the year they were incurred. Currently, R&E expenses must be capitalized and amortized over five years for domestic activities and 15 years for foreign activities. Some companies complain that the current law results in higher taxes, weaker cash flow and forecasting challenges. The One, Big, Beautiful Bill would restore the immediate deductibility of R&E expenses. If enacted, it would generally allow businesses to deduct domestic R&E expenditures paid or incurred in taxable years beginning after Dec. 31, 2024, and before Jan. 1, 2030.
Our Blog 