Washington D.C. – A group of senators from both parties has introduced legislation designed to strengthen research and development capabilities for U.S. businesses, particularly targeting small businesses and startups.
The American Innovation and Jobs Act, introduced by Senators Katie Britt (R-Ala.), Todd Young (R-Ind.), Maggie Hassan (D-N.H.), and several colleagues, seeks to expand and enhance R&D tax incentives to help American businesses compete globally.
“My support of the American Innovation and Jobs Act emphasizes my continued commitment to putting hardworking Americans first,” said Senator Britt. “I’m grateful to join my colleagues in introducing this legislation to help small businesses invest in research and development with fewer barriers. It is absolutely imperative we remain global leaders in innovation, not only to outcompete the likes of China, but also to protect our national interests and support great American entrepreneurs.”
The legislation specifically addresses provisions from the 2017 Tax Cuts and Jobs Act that allowed for full and immediate expensing of R&D investments. These provisions began phasing out in 2022 and are set to expire in 2026. The new bill would make these provisions permanent, allowing companies to continue fully deducting R&D expenses annually while also creating a retroactive opportunity for businesses to take advantage of the deduction during years when full expensing had begun to amortize.
Senator Young emphasized the global competitive aspect, stating: “The United States is locked in a competition to ensure we maintain our position as the global leader in scientific and technological innovation. Our legislation would incentivize job-creating R&D activity in the United States – particularly among start-ups – to drive our innovation future, strengthen international competitiveness, and protect our national security.”
For startups specifically, the bill would raise the cap on refundable R&D tax credits to $750,000 over ten years and lower certain qualifying thresholds. It would also expand eligibility by increasing the gross receipts threshold from $5 million to $15 million and extending the period during which startups can claim the credit to up to eight years after reaching $25,000 in revenue.
“As many small businesses struggle with rising costs, this bipartisan legislation cuts taxes for small businesses that invest in innovation, which will also help the United States continue to outcompete our adversaries like China,” said Senator Hassan.
This marks Senator Britt’s second time supporting the legislation, having previously co-sponsored it in 2023.
