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H.R. 1990House119th Congress (2025-2027)In Committee

American Innovation and R&D Competitiveness Act of 2025

To amend the Internal Revenue Code of 1986 to restore the deduction for research and experimental expenditures.

Sponsored by Ron EstesRep. Ron Estes (R-KS)
Introduced March 10, 2025

AI-Generated Summary

Updated November 24, 2025 at 2:04 AM UTC

The American Innovation and R&D Competitiveness Act of 2025 changes the tax code to let companies treat their research and experimental spending as a current‑year deduction again. Businesses can also choose to spread the deduction over at least five years if they wish. The bill clarifies that these rules don’t cover land, depreciable property, or mineral exploration, and it aligns related research tax credit provisions with the new deduction rules. The changes apply to tax years starting after Dec. 31, 2021.

Key Provisions

  • Restores the ability for businesses to deduct research and experimental (R&E) costs as ordinary expenses in the year they are incurred, rather than being required to capitalize them.
  • Allows taxpayers to elect, with the IRS’s approval, to amortize R&E costs over a period of at least 60 months (five years) if they prefer not to expense them immediately.
  • Specifies that the new rules do not apply to land purchases, improvements to property that is depreciable or depletable, or to exploration expenses for minerals, oil, or gas.
  • Updates related tax code sections (41 and 280C) so that research tax credits are coordinated with the restored deduction and the optional amortization election.
  • Amends the code’s table of sections to reflect the changes to Section 174 and sets the effective date for tax years beginning after December 31, 2021.

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

March 10, 2025

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HouseIntro Referral

Introduced in House

March 10, 2025

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

March 10, 2025

Bill Text

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Introduced in HouseIssued March 10, 2025

I

119th CONGRESS

1st Session

H. R. 1990

IN THE HOUSE OF REPRESENTATIVES

March 10, 2025

Mr. Estes (for himself, Mr. Larson of Connecticut, Mr. Buchanan, Ms. DelBene, Mr. Smith of Nebraska, Ms. Sewell, Mr. Kelly of Pennsylvania, Mr. Beyer, Mr. Schweikert, Mr. Panetta, Mr. LaHood, Mr. Horsford, Mr. Arrington, Ms. Brownley, Mr. Smucker, Mr. Khanna, Mr. Hern of Oklahoma, Ms. Bonamici, Mrs. Miller of West Virginia, Ms. Titus, Mr. Murphy, Ms. Houlahan, Mr. Kustoff, Mr. Cleaver, Mr. Fitzpatrick, Mr. Carbajal, Mr. Steube, Mrs. Foushee, Ms. Tenney, Ms. Scholten, Mrs. Fischbach, Ms. Davids of Kansas, Mr. Moore of Utah, Ms. Craig, Ms. Van Duyne, Mr. Morelle, Mr. Feenstra, Mr. Davis of North Carolina, Ms. Malliotakis, Mr. Harder of California, Mr. Carey, Mr. Neguse, Mr. Yakym, Mr. Auchincloss, Mr. Miller of Ohio, Mr. Pappas, Mr. Bean of Florida, Mr. Moulton, Mr. Moran, Mr. Mullin, Mr. Moolenaar, Mr. Connolly, Mrs. Harshbarger, Ms. McClellan, Mr. Huizenga, Mr. Krishnamoorthi, Mr. Mann, Mr. Lieu, Mr. Barr, Ms. Jacobs, Mr. Carter of Georgia, Mr. Swalwell, Mr. Meuser, Mr. Garamendi, Mr. McCormick, Mr. Amo, Mr. Edwards, and Mrs. Beatty) introduced 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.

1.

Short title

This Act may be cited as the American Innovation and R&D Competitiveness Act of 2025.

2.

Research and experimental expenditures

(a)

In general

Section 174 of the Internal Revenue Code of 1986 is amended to read as follows:

174.

Research and experimental expenditures

(a)

Treatment as Expenses

(1)

In general

A taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account. The expenditures so treated shall be allowed as a deduction.

(2)

When method may be adopted

(A)

Without consent

A taxpayer may, without the consent of the Secretary, adopt the method provided in this subsection for his first taxable year for which expenditures described in paragraph (1) are paid or incurred.

(B)

With consent

A taxpayer may, with the consent of the Secretary, adopt at any time the method provided in this subsection.

(3)

Scope

The method adopted under this subsection shall apply to all expenditures described in paragraph (1). The method adopted shall be adhered to in computing taxable income for the taxable year and for all subsequent taxable years unless, with the approval of the Secretary, a change to a different method is authorized with respect to part or all of such expenditures.

(b)

Amortization of Certain Research and Experimental Expenditures

(1)

In general

At the election of the taxpayer, made in accordance with regulations prescribed by the Secretary, research or experimental expenditures which are—

(A)

paid or incurred by the taxpayer in connection with his trade or business,

(B)

not treated as expenses under subsection (a), and

(C)

chargeable to capital account but not chargeable to property of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion),

may be treated as deferred expenses. In computing taxable income, such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the taxpayer (beginning with the month in which the taxpayer first realizes benefits from such expenditures). Such deferred expenses are expenditures properly chargeable to capital account for purposes of section 1016(a)(1) (relating to adjustments to basis of property).
(2)

Time for and scope of election

The election provided by paragraph (1) may be made for any taxable year, but only if made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof). The method so elected, and the period selected by the taxpayer, shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless, with the approval of the Secretary, a change to a different method (or to a different period) is authorized with respect to part or all of such expenditures. The election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election.

(c)

Land and Other Property

This section shall not apply to any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures.

(d)

Exploration Expenditures

This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).

(e)

Only Reasonable Research Expenditures Eligible

This section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances.

.

(b)

Clerical Amendment

The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 174 and inserting the following new item:

Sec. 174. Research and experimental expenditures

.

(c)

Conforming Amendments

(1)

Section 41(d)(1)(A) of such Code is amended by striking specified research or experimental expenditures under section 174 and inserting expenses under section 174.

(2)

Section 280C(c) of such Code is amended to read as follows:

(c)

Credit for increasing research activities

(1)

In general

No deduction shall be allowed for that portion of the qualified research expenses (as defined in section 41(b)) or basic research expenses (as defined in section 41(e)(2)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 41(a).

(2)

Similar rule where taxpayer capitalizes rather than deducts expenses

If—

(A)

the amount of the credit determined for the taxable year under section 41(a)(1), exceeds

(B)

the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses (determined without regard to paragraph (1)),

the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.
(3)

Election of reduced credit

(A)

In general

In the case of any taxable year for which an election is made under this paragraph—

(i)

paragraphs (1) and (2) shall not apply, and

(ii)

the amount of the credit under section 41(a) shall be the amount determined under subparagraph (B).

(B)

Amount of reduced credit

The amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of—

(i)

the amount of credit determined under section 41(a) without regard to this paragraph, over

(ii)

the product of—

(I)

the amount described in clause (i), and

(II)

the rate of tax under section 11(b).

(C)

Election

An election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), shall be made on such return, and shall be made in such manner as the Secretary may prescribe. Such an election, once made, shall be irrevocable.

(4)

Controlled groups

Paragraph (3) of subsection (b) shall apply for purposes of this subsection.

.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.