TECNA Applauds Bipartisan Tax Bill to Reinstate Important R&D Tax Provision for Small Businesses and Innovators
TECNA Applauds Bipartisan Tax Bill to Reinstate Important R&D Tax Provision for Small Businesses and Innovators
FOR IMMEDIATE RELEASE
TECNA APPLAUDS BIPARTISAN TAX BILL TO REINSTATE IMPORTANT R&D TAX PROVISION FOR SMALL BUSINESSES AND INNOVATORS
Sewickley, PA – February 1, 2024 - The Technology Councils of North America (TECNA), a leading advocate for business technology councils serving small- to medium-sized businesses and innovators, applauds the passage of H.R. 7024, the Tax Relief for American Families and Workers Act, legislation that repeals the harmful research and development (R&D) amortization provisions that went into effect in 2022.
For nearly 70 years, American businesses have been permitted to deduct one hundred percent of R&D expenses from taxable income in the year those expenses were incurred. However, when Congress passed the Tax Cuts and Jobs Act (TCJA) in 2017, it changed the tax treatment of R&D to partially off-set the revenue impact of the tax cuts. Beginning in 2022, businesses have been required to amortize R&D investments over five to 15 years, dramatically increasing their annual tax liability and disincentivizing innovation generating investments. Since the change took effect, the rate of growth of R&D investments dropped from a five-year average of 6.6 percent to less than 1.2 percent last year – with R&D spending decreasing by 2.3 percent in the most recent quarter.
“This harmful tax change has devastated America’s small businesses and innovators, who are increasingly unable to invest in critical R&D innovation. Moreover, these surprise tax bills have even forced some of our member companies to take out loans just to meet payroll, delay hiring or cut jobs as they wait for corrective legislative action,” said Jennifer Young, President and CEO of TECNA. “This is first and foremost a jobs issue and we’ve been pounding the pavement in DC to ensure Congress understands the impact on small business and innovation in the US.”
Every $1 billion in R&D spending supports 17,000 jobs and small business alone accounts for approximately $90 billion of all private-sector R&D investments. This could potentially impact more than 1.5 million American jobs.
“We want to ensure that the next R&D dollar is spent in the United States,” said Young. “Today’s passage of bipartisan tax extenders brings us closer to some relief. We look forward to continuing to work with Congress to support small tech innovators and home-grown R&D to get this bill to the President’s desk.”
TECNA is grateful to the 357 House members who voted in support of the legislation. We thank Chairman Smith (R-MO) and Ranking Member Neal (D-MA) for their work to reach a bipartisan agreement and Representatives Ron Estes (R-KS) and John Larson (D-CT) who have worked to build broad support in their respective chambers.
About TECNA
The Technology Councils of North America (TECNA) represents approximately 60 IT and Technology trade organizations that, in turn, represent more than 22,000 technology-related companies in North America. TECNA serves its members and the industry through its strong peer-to-peer network and its regional initiatives to raise the visibility and viability of the technology industry. This is accomplished by empowering regional technology organizations and serving as their collective voice in growing the North American technology economy. More information on TECNA can be found at: www.tecna.org or @techcouncils on X.
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Contact
Finn Partners for TECNA