Proposed Bipartisan Tax Bill Rolls Back R&D Changes to Address Concerns from Businesses and Families

On January 16, 2024, House Ways and Means Committee Chairman, Jason Smith, and Senate Finance Committee Chairman, Ron Wyden, introduced the Tax Relief for American Families and Workers Act of 2024. The key elements of the bipartisan bill include the child tax credit, Internal Revenue Code (IRC) Section 174 expensing, bonus depreciation, and interest expensing.

The bill is viewed favorably by many businesses as it would reinstate immediate deduction of U.S.-based research and development (R&D) expenses for tax years beginning after December 31, 2021, and before January 1, 2026. Currently, businesses are required to amortize these expenses over a five-year period. The bill still requires foreign-based R&D to be amortized over 15 years.

In addition, the bill would extend 100% bonus depreciation and reinstate EBITDA-based business interest limitation under IRC Section 163(j) for taxable years beginning after December 31, 2023, and before January 1, 2026.

The next step in the legislative process is for the Ways and Means Committee to further review and mark up the bill before sending it for vote by the full House of Representatives.

The tax bill is a promising first step to bringing much needed tax relief for U.S. businesses. Anchin is monitoring the progress of the bill closely and will report on any major updates.

If you have questions, please contact Yair Holtzman, Partner and Leader of Anchin’s Research & Development Tax Credits and Incentives group, at [email protected], or your Anchin Relationship Partner.