The House of Representatives recently passed the Tax Relief for American Families and Workers Act of 2024 with overwhelming bipartisan support, but the fate of the legislation now rests in the hands of the Senate. The proposed act includes reinstating immediate expensing for domestic research expenditures, a measure deemed critical for the growth and innovation of businesses across the United States.
During a Senate Finance Committee meeting titled “American Made: Growing U.S. Manufacturing Through the Tax Code,” there was a unanimous agreement among panelists on the urgent need for this tax policy change in the current year. The act, co-written by Senator Ron Wyden and Representative Jason Smith, aims to provide relief to millions of small businesses that are eagerly awaiting its passage to ensure their survival.
The legislation includes three major provisions that would significantly impact businesses nationwide. These provisions involve immediate expensing of domestic research expenditures, increasing bonus depreciation for qualified property, and adjusting the interest expense limitation based on adjusted taxable income.
Business leaders from various industries emphasized the importance of restoring immediate expensing for research expenditures to foster innovation and competitiveness in the U.S. market. CEOs like Mark Widmar of First Solar and Peter Huntsman of Huntsman Corporation shared how the current tax requirements have hindered their companies' ability to invest in research and development, leading to job losses and decreased innovation.
Despite the potential benefits of the act and its positive revenue impact on the federal budget, there seems to be hesitancy in moving it forward in the Senate. While technical issues with the bill are minimal, political considerations and the proximity to the upcoming elections may be influencing the decision-making process.
As stakeholders continue to advocate for the immediate expensing of research expenditures, the future of American innovation and business growth hangs in the balance. It is crucial for Congress to act swiftly to ensure that businesses of all sizes can thrive and contribute to the country's economic competitiveness on a global scale.
