Bipartisan Tax Deal Restores R&D Expensing Through 2025

A bipartisan tax agreement announced this morning could bring major changes for businesses and families alike. The Tax Relief for American Families and Workers Act of 2024 includes several business-friendly provisions—most notably, the retroactive restoration of full R&D expensing for U.S.-based research costs through the end of 2025.

Other proposed tax breaks include enhancements to the Child Tax Credit, the Low-Income Housing Tax Credit, and support for disaster-struck communities. To offset the cost of these benefits, the bill proposes eliminating the Employee Retention Credit (ERC) program as of January 31, 2024.

Importantly, foreign R&D expenses would still be subject to 15-year amortization under Section 174. This means that only domestic research activities would benefit from immediate expensing if the bill passes.

Key Features of the Proposed Tax Package

The draft legislation, officially named The Tax Relief for American Families and Workers Act of 2024, aims to:

• Restore immediate expensing for U.S.-based R&D through 2025
• Support working families via an enhanced Child Tax Credit
• Expand innovation and competitiveness with pro-growth policies
• Cut red tape for Main Street businesses
• Provide disaster relief through targeted tax benefits
• End the ERC program to eliminate fraud and offset budget costs

What’s Next?

While this agreement offers real momentum, lawmakers still face the challenge of navigating a potential government shutdown. The path to passage remains uncertain—but this proposal gives renewed hope to both American businesses and families looking for relief.

You can read the full press release from the House Ways and Means Committee here: Smith, Wyden Announce Agreement on Tax Framework

Need help understanding how this affects your 2024 tax strategy?

Reach out to the MASSIE team for guidance on how to plan under both current and proposed Section 174 rules.

Catie Ely, CPA

As Director of Tax Credits at MASSIE, Catie aims to build strong client relationships and maximize sustainable R&D credit benefits while also minimizing disruption to client business operations. She is known for her approachability and ability...