H.R.1062 - Growing and Preserving Innovation in America Act of 2025 (119th Congress)
Summary
H.R.1062, the "Growing and Preserving Innovation in America Act of 2025," aims to amend the Internal Revenue Code of 1986 by repealing the scheduled reduction in the deduction for foreign-derived intangible income (FDII). This bill seeks to maintain the FDII deduction at 37.5 percent instead of allowing it to decrease as previously scheduled. The bill was introduced in the House of Representatives on February 6, 2025, and referred to the Committee on Ways and Means.
Expected Effects
If enacted, H.R.1062 would prevent a decrease in the tax deduction available to companies for income derived from foreign sales of goods and services based on intellectual property developed in the United States. This could incentivize companies to keep intellectual property and related jobs within the U.S. It may also impact the federal budget by altering projected tax revenues.
Potential Benefits
- Incentivizes Domestic Innovation: By maintaining a higher deduction for foreign-derived intangible income, the bill encourages companies to keep their intellectual property and related research and development activities in the United States.
- Supports Export Competitiveness: The bill could help U.S. companies compete in global markets by reducing their tax burden on income generated from exports.
- Potential Job Creation: Encouraging domestic innovation and export competitiveness could lead to job creation in the United States.
- Simplifies Tax Planning: Repealing the scheduled reduction provides businesses with greater certainty and predictability in their tax planning.
Most Benefited Areas:
Potential Disadvantages
- Potential Revenue Loss: Repealing the scheduled reduction in the FDII deduction could decrease federal tax revenues, potentially increasing the budget deficit.
- Complexity in Tax Code: While it repeals a scheduled change, the FDII provisions themselves are complex and may still present challenges for businesses.
- Disproportionate Benefit to Large Corporations: The FDII deduction may disproportionately benefit large multinational corporations with significant foreign-derived intangible income.
- Risk of Encouraging Profit Shifting: The FDII deduction, even at the current rate, could incentivize companies to shift profits to the U.S. to take advantage of the deduction, potentially distorting economic activity.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The Constitution grants Congress broad authority over taxation, and this bill represents an exercise of that power. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).