S1639119th CongressWALLET

American Innovation and Jobs Act

Sponsored By: Senator Todd Young

Introduced

Summary

Immediate expensing of research and experimental expenditures would be restored and strengthened to let businesses deduct R&D costs sooner and speed tax relief for innovation. The bill also creates a fallback amortization path and updates how R&D deductions interact with the research tax credit.

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  • Companies that fund research and development would be able to treat qualifying R&E spending as deductible in the year paid or incurred instead of capitalizing it, with an option to instead amortize certain costs over at least 60 months.
  • Tax accounting rules would let taxpayers adopt the section 174 method in their first year without Secretary approval or switch later with consent, and the chosen method must remain consistent across years unless officially changed.
  • Claimants of the research tax credit would see updated rules for how section 41 credits and section 174 deductions interact, including an irrevocable election to accept a reduced credit in certain cases and related basis adjustments.

The changes would apply to amounts paid or incurred in taxable years beginning after December 31, 2021.

Bill Overview

Analyzed Economic Effects

4 provisions identified: 3 benefits, 0 costs, 1 mixed.

Bigger refundable R&D credit cap

This bill would replace the $250,000 refundable cap on the R&D credit with a rising "applicable amount." The cap would be $500,000 for tax years starting after Dec. 31, 2024, and would increase stepwise to $750,000 for years starting after Dec. 31, 2034. It would also relax startup tests and dollar limits so more small firms qualify for the refundable credit. These changes would apply to taxable years beginning after Dec. 31, 2024.

Higher R&D credit rates for startups

If enacted, qualified small businesses could use higher R&D credit rates. The bill would raise the main alternative rate to 20% (up from 14%) and let certain taxpayers substitute 10% for 6% under an alternate method. Startups could also average research spending by ignoring zero‑research years in the three‑year comparison. These options would apply for tax years beginning after the date of enactment.

Immediate expensing for R&D costs

This bill would let businesses treat most research and experimental costs as current tax deductions instead of capitalized costs. Taxpayers could also elect to amortize some research costs ratably over at least 60 months, starting when benefits begin. The rule would not apply to exploration costs or to buying or improving land and some depreciable or depletable property. These changes would apply to tax years beginning after Dec. 31, 2021.

R&D credit and deduction rules

If enacted, taxpayers who claim the §41 research credit would not be able to deduct the portion of research costs equal to the credit. If the credit is larger than deductible expenses, the excess would reduce amounts charged to capital accounts. Taxpayers could instead make an irrevocable election on their return to accept a reduced credit (computed using their corporate tax rate) and keep the deduction. These rules would apply to tax years beginning after Dec. 31, 2021.

Sponsors & CoSponsors

Sponsor

Todd Young

IN • R

Cosponsors

  • Maggie Hassan

    NH • D

    Sponsored 5/7/2025

  • James Lankford

    OK • R

    Sponsored 5/7/2025

  • Jeanne Shaheen

    NH • D

    Sponsored 5/7/2025

  • Steve Daines

    MT • R

    Sponsored 5/7/2025

  • Mark Warner

    VA • D

    Sponsored 5/7/2025

  • John Barrasso

    WY • R

    Sponsored 5/7/2025

  • Jacky Rosen

    NV • D

    Sponsored 5/7/2025

  • Thomas Tillis

    NC • R

    Sponsored 5/7/2025

  • Gary Peters

    MI • D

    Sponsored 5/7/2025

  • Roger Marshall

    KS • R

    Sponsored 5/7/2025

  • Alex Padilla

    CA • D

    Sponsored 5/7/2025

  • Tommy Tuberville

    AL • R

    Sponsored 5/7/2025

  • Patty Murray

    WA • D

    Sponsored 5/7/2025

  • John Kennedy

    LA • R

    Sponsored 5/7/2025

  • Amy Klobuchar

    MN • D

    Sponsored 5/7/2025

  • Pete Ricketts

    NE • R

    Sponsored 5/7/2025

  • Mark Kelly

    AZ • D

    Sponsored 5/7/2025

  • Katie Britt

    AL • R

    Sponsored 5/7/2025

  • Timothy Kaine

    VA • D

    Sponsored 5/7/2025

  • Shelley Capito

    WV • R

    Sponsored 5/7/2025

  • Catherine Cortez Masto

    NV • D

    Sponsored 5/7/2025

  • Deb Fischer

    NE • R

    Sponsored 5/7/2025

  • Tammy Baldwin

    WI • D

    Sponsored 5/7/2025

  • Jerry Moran

    KS • R

    Sponsored 5/7/2025

  • Sen. Luján, Ben Ray [D-NM]

    NM • D

    Sponsored 5/7/2025

  • Bill Hagerty

    TN • R

    Sponsored 5/7/2025

  • Christopher Coons

    DE • D

    Sponsored 5/7/2025

  • Markwayne Mullin

    OK • R

    Sponsored 5/7/2025

  • Elissa Slotkin

    MI • D

    Sponsored 5/7/2025

  • Roger Wicker

    MS • R

    Sponsored 5/7/2025

  • Angus King

    ME • I

    Sponsored 5/7/2025

  • Ted Budd

    NC • R

    Sponsored 5/7/2025

  • Jon Ossoff

    GA • D

    Sponsored 5/7/2025

  • Jon Husted

    OH • R

    Sponsored 5/7/2025

  • Martin Heinrich

    NM • D

    Sponsored 5/7/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov

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