I
119THCONGRESS
1
STSESSION H. R. 1990
To amend the Internal Revenue Code of 1986 to restore the deduction
for research and experimental expenditures.
IN THE HOUSE OF REPRESENTATIVES
MARCH10, 2025
Mr. E
STES(for himself, Mr. LARSONof Connecticut, Mr. BUCHANAN, Ms.
D
ELBENE, Mr. SMITHof Nebraska, Ms. SEWELL, Mr. KELLYof Penn-
sylvania, Mr. B
EYER, Mr. SCHWEIKERT, Mr. PANETTA, Mr. LAHOOD,
Mr. H
ORSFORD, Mr. ARRINGTON, Ms. BROWNLEY, Mr. SMUCKER, Mr.
K
HANNA, Mr. HERNof Oklahoma, Ms. BONAMICI, Mrs. MILLERof West
Virginia, Ms. T
ITUS, Mr. MURPHY, Ms. HOULAHAN, Mr. KUSTOFF, Mr.
C
LEAVER, Mr. FITZPATRICK, Mr. CARBAJAL, Mr. STEUBE, Mrs.
F
OUSHEE, Ms. TENNEY, Ms. SCHOLTEN, Mrs. FISCHBACH, Ms. DAVIDS
of Kansas, Mr. M
OOREof Utah, Ms. CRAIG, Ms. VANDUYNE, Mr.
M
ORELLE, Mr. FEENSTRA, Mr. DAVISof North Carolina, Ms.
M
ALLIOTAKIS, Mr. HARDERof California, Mr. CAREY, Mr. NEGUSE, Mr.
Y
AKYM, Mr. AUCHINCLOSS, Mr. MILLERof Ohio, Mr. PAPPAS, Mr. BEAN
of Florida, Mr. M
OULTON, Mr. MORAN, Mr. MULLIN, Mr. MOOLENAAR,
Mr. C
ONNOLLY, Mrs. HARSHBARGER, Ms. MCCLELLAN, Mr. HUIZENGA,
Mr. K
RISHNAMOORTHI, Mr. MANN, Mr. LIEU, Mr. BARR, Ms. JACOBS,
Mr. C
ARTERof Georgia, Mr. SWALWELL, Mr. MEUSER, Mr. GARAMENDI,
Mr. M
CCORMICK, Mr. AMO, Mr. EDWARDS, and Mrs. BEATTY) intro-
duced the following bill; which was referred to the Committee on Ways
and Means
A BILL
To amend the Internal Revenue Code of 1986 to restore
the deduction for research and experimental expenditures.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
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SECTION 1. SHORT TITLE. 1
This Act may be cited as the ‘‘American Innovation 2
and R&D Competitiveness Act of 2025’’. 3
SEC. 2. RESEARCH AND EXPERIMENTAL EXPENDITURES. 4
(a) I
NGENERAL.—Section 174 of the Internal Rev-5
enue Code of 1986 is amended to read as follows: 6
‘‘SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES. 7
‘‘(a) T
REATMENT ASEXPENSES.— 8
‘‘(1) I
N GENERAL.—A taxpayer may treat re-9
search or experimental expenditures which are paid 10
or incurred by him during the taxable year in con-11
nection with his trade or business as expenses which 12
are not chargeable to capital account. The expendi-13
tures so treated shall be allowed as a deduction. 14
‘‘(2) W
HEN METHOD MAY BE ADOPTED .— 15
‘‘(A) W
ITHOUT CONSENT .—A taxpayer 16
may, without the consent of the Secretary, 17
adopt the method provided in this subsection 18
for his first taxable year for which expenditures 19
described in paragraph (1) are paid or incurred. 20
‘‘(B) W
ITH CONSENT.—A taxpayer may, 21
with the consent of the Secretary, adopt at any 22
time the method provided in this subsection. 23
‘‘(3) S
COPE.—The method adopted under this 24
subsection shall apply to all expenditures described 25
in paragraph (1). The method adopted shall be ad-26
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•HR 1990 IH
hered to in computing taxable income for the taxable 1
year and for all subsequent taxable years unless, 2
with the approval of the Secretary, a change to a 3
different method is authorized with respect to part 4
or all of such expenditures. 5
‘‘(b) A
MORTIZATION OF CERTAINRESEARCH AND 6
E
XPERIMENTALEXPENDITURES.— 7
‘‘(1) I
N GENERAL.—At the election of the tax-8
payer, made in accordance with regulations pre-9
scribed by the Secretary, research or experimental 10
expenditures which are— 11
‘‘(A) paid or incurred by the taxpayer in 12
connection with his trade or business, 13
‘‘(B) not treated as expenses under sub-14
section (a), and 15
‘‘(C) chargeable to capital account but not 16
chargeable to property of a character which is 17
subject to the allowance under section 167 (re-18
lating to allowance for depreciation, etc.) or sec-19
tion 611 (relating to allowance for depletion), 20
may be treated as deferred expenses. In computing 21
taxable income, such deferred expenses shall be al-22
lowed as a deduction ratably over such period of not 23
less than 60 months as may be selected by the tax-24
payer (beginning with the month in which the tax-25
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payer first realizes benefits from such expenditures). 1
Such deferred expenses are expenditures properly 2
chargeable to capital account for purposes of section 3
1016(a)(1) (relating to adjustments to basis of prop-4
erty). 5
‘‘(2) T
IME FOR AND SCOPE OF ELECTION .—The 6
election provided by paragraph (1) may be made for 7
any taxable year, but only if made not later than the 8
time prescribed by law for filing the return for such 9
taxable year (including extensions thereof). The 10
method so elected, and the period selected by the 11
taxpayer, shall be adhered to in computing taxable 12
income for the taxable year for which the election is 13
made and for all subsequent taxable years unless, 14
with the approval of the Secretary, a change to a 15
different method (or to a different period) is author-16
ized with respect to part or all of such expenditures. 17
The election shall not apply to any expenditure paid 18
or incurred during any taxable year before the tax-19
able year for which the taxpayer makes the election. 20
‘‘(c) L
AND ANDOTHERPROPERTY.—This section 21
shall not apply to any expenditure for the acquisition or 22
improvement of land, or for the acquisition or improve-23
ment of property to be used in connection with the re-24
search or experimentation and of a character which is sub-25
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ject to the allowance under section 167 (relating to allow-1
ance for depreciation, etc.) or section 611 (relating to al-2
lowance for depletion); but for purposes of this section al-3
lowances under section 167, and allowances under section 4
611, shall be considered as expenditures. 5
‘‘(d) E
XPLORATIONEXPENDITURES.—This section 6
shall not apply to any expenditure paid or incurred for 7
the purpose of ascertaining the existence, location, extent, 8
or quality of any deposit of ore or other mineral (including 9
oil and gas). 10
‘‘(e) O
NLYREASONABLERESEARCHEXPENDITURES 11
E
LIGIBLE.—This section shall apply to a research or ex-12
perimental expenditure only to the extent that the amount 13
thereof is reasonable under the circumstances.’’. 14
(b) C
LERICALAMENDMENT.—The table of sections 15
for part VI of subchapter B of chapter 1 of such Code 16
is amended by striking the item relating to section 174 17
and inserting the following new item: 18
‘‘Sec. 174. Research and experimental expenditures’’.
(c) CONFORMINGAMENDMENTS.— 19
(1) Section 41(d)(1)(A) of such Code is amend-20
ed by striking ‘‘specified research or experimental 21
expenditures under section 174’’ and inserting ‘‘ex-22
penses under section 174’’. 23
(2) Section 280C(c) of such Code is amended to 24
read as follows: 25
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‘‘(c) CREDIT FORINCREASINGRESEARCHACTIVI-1
TIES.— 2
‘‘(1) I
N GENERAL.—No deduction shall be al-3
lowed for that portion of the qualified research ex-4
penses (as defined in section 41(b)) or basic re-5
search expenses (as defined in section 41(e)(2)) oth-6
erwise allowable as a deduction for the taxable year 7
which is equal to the amount of the credit deter-8
mined for such taxable year under section 41(a). 9
‘‘(2) S
IMILAR RULE WHERE TAXPAYER CAP -10
ITALIZES RATHER THAN DEDUCTS EXPENSES .—If— 11
‘‘(A) the amount of the credit determined 12
for the taxable year under section 41(a)(1), ex-13
ceeds 14
‘‘(B) the amount allowable as a deduction 15
for such taxable year for qualified research ex-16
penses or basic research expenses (determined 17
without regard to paragraph (1)), 18
the amount chargeable to capital account for the 19
taxable year for such expenses shall be reduced by 20
the amount of such excess. 21
‘‘(3) E
LECTION OF REDUCED CREDIT .— 22
‘‘(A) I
N GENERAL.—In the case of any 23
taxable year for which an election is made 24
under this paragraph— 25
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‘‘(i) paragraphs (1) and (2) shall not 1
apply, and 2
‘‘(ii) the amount of the credit under 3
section 41(a) shall be the amount deter-4
mined under subparagraph (B). 5
‘‘(B) A
MOUNT OF REDUCED CREDIT .—The 6
amount of credit determined under this sub-7
paragraph for any taxable year shall be the 8
amount equal to the excess of— 9
‘‘(i) the amount of credit determined 10
under section 41(a) without regard to this 11
paragraph, over 12
‘‘(ii) the product of— 13
‘‘(I) the amount described in 14
clause (i), and 15
‘‘(II) the rate of tax under sec-16
tion 11(b). 17
‘‘(C) E
LECTION.—An election under this 18
paragraph for any taxable year shall be made 19
not later than the time for filing the return of 20
tax for such year (including extensions), shall 21
be made on such return, and shall be made in 22
such manner as the Secretary may prescribe. 23
Such an election, once made, shall be irrev-24
ocable. 25
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‘‘(4) CONTROLLED GROUPS .—Paragraph (3) of 1
subsection (b) shall apply for purposes of this sub-2
section.’’. 3
(d) E
FFECTIVEDATE.—The amendments made by 4
this section shall apply to taxable years beginning after 5
December 31, 2021. 6
Æ
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