U.S. Senators Todd Young and Maggie Hassan have introduced the American Innovation and Jobs Act, a bill aimed at enhancing research and development (R&D) by small businesses and startups in the United States. The legislation seeks to bolster America’s competitive edge against global rivals like China, which are heavily investing in R&D.
Historically, companies investing in R&D could claim a tax credit or deduct their investments, facilitating the development of innovative products that contribute to job creation and economic growth. However, a provision from the 2017 Tax Cuts and Jobs Act allowing full expensing of R&D expired in 2022.
The new bill proposes to extend this provision permanently, allowing businesses to retroactively benefit from deductions for the years when full expensing was unavailable. This move is seen as crucial for maintaining U.S. leadership in scientific and technological innovation amid growing competition from countries like China.
Senator Young emphasized the importance of maintaining global leadership: “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. Congress must pass this legislation.”
Senator Hassan highlighted how this measure could aid small businesses: “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.”
The American Innovation and Jobs Act has garnered support from several senators across party lines including James Lankford, Jeanne Shaheen, Steve Daines, Mark Warner, John Barrasso, Jacky Rosen among others.
Endorsements for the bill come from organizations such as the R&D Coalition which includes various companies and trade associations like Business Roundtable and National Association of Manufacturers.
Previously introduced by Senator Young in 2021, he has been vocal about its significance through an op-ed discussing R&D investment’s role in national security.
Full details of the proposed legislation are available online.
