Retroactive Fix for Section 174 Currently in Committee

Congress has introduced the first bill of this session that addresses the current requirement for businesses to capitalize and amortize their research or experimental (R&E) costs. The bill, titled “American Innovation and R&D Competitiveness Act of 2025”, would immediately restore the ability to deduct all research expenditures in the year incurred, as well as make the fix retroactive to tax years beginning after 12/31/2021. The bill would undo the changes made by the Tax Cuts and Jobs Act (TCJA) with no future implementation of the capitalization requirements. This differs from the bill passed by the House last January, which only impacted domestic expenses and delayed the capitalization requirement until 2026.

With 67 initial co-sponsors, this bill has broad bipartisan support. It remains to be seen what action the House Ways and Means committee will take, particularly while there is an expectation of a larger tax package in the next couple of months. While a single-issue bill may be able to get more traction, it may also be impeded by competing congressional priorities

CTI will provide updates as they become available. If you have any questions on what this might mean for your business, please reach out to our team of CPAs and attorneys.