Members of Congress Reintroduce R&D Competitiveness Act: What It Means for Future Tax Filings

On March 10, 2025, a bipartisan group reintroduced the American Innovation and R&D Competitiveness Act of 2025. This bill, sponsored by  Rep. Ron Estes (R-KS) and Rep. Jon Larson (D-CT), mirrors bills they introduced in 2019 and 2023.

The current proposal aims to retroactively reinstate R&D Section 174 expensing back to 2022, following its removal as an expiring provision of the Tax Cuts and Jobs Act. Unfortunately, this draft bill is mostly symbolic and unlikely to progress as legislation unless it is attached to a larger piece of legislation.

The most viable path for reinstating Section 174 expensing is through a comprehensive tax package currently being developed in Congress. However, the drafts of this bill may not be available until later this year. We have some insight into the potential size of this legislation based on the Budget Resolution passed earlier this year.

The budget resolution has a cap of $4.5 trillion for tax cuts, making a retroactive fix for Section 174 challenging, if not impossible. We anticipate that the final bill will address Section 174 on a prospective basis only, potentially including a phase-out after five years.

While the American Innovation and R&D Competitiveness Act offers some hope to taxpayers, it is unlikely to become law. We recommend that taxpayers and CPAs proceed with 2024 filings, assuming full expensing will not be reinstated until 2025 at the earliest. Nonetheless, the ongoing discussions surrounding R&D expensing give us hope that lawmakers will include it in a final bill for 2025 and beyond.