H.R.1990 - American Innovation and R&D Competitiveness Act of 2025 (119th Congress)
Summary
H.R. 1990, the American Innovation and R&D Competitiveness Act of 2025, aims to amend the Internal Revenue Code of 1986 to restore the deduction for research and experimental (R&E) expenditures. This bill seeks to allow taxpayers to treat R&E expenditures as expenses that are not chargeable to capital account, providing an immediate deduction. The changes would apply to taxable years beginning after December 31, 2021.
Expected Effects
The primary effect of this bill would be to incentivize businesses to invest more in research and development by making it more financially appealing. By restoring the immediate deduction for R&E expenditures, companies would see a reduction in their current tax liability. This could lead to increased innovation and economic growth.
Potential Benefits
- Increased investment in research and development by businesses.
- Potential for new innovations and technological advancements.
- Stimulation of economic growth through R&D activities.
- Simplification of tax accounting for R&E expenditures.
- Enhanced competitiveness of US businesses in the global market.
Potential Disadvantages
- Potential for increased budget deficits due to reduced tax revenue.
- Possible complexity in defining and categorizing qualifying R&E expenditures.
- Risk of companies misclassifying expenses to take advantage of the deduction.
- Benefits may disproportionately favor larger corporations with established R&D programs.
- Delayed impact, as the changes apply retroactively to 2021, potentially creating administrative burdens.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Constitution's broad mandate to "promote the general Welfare" (Preamble). By encouraging innovation and economic growth through tax policy, the bill indirectly supports this constitutional goal. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States, which provides the constitutional basis for tax legislation like this.
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).