New Legislation Seeks to Support High-tech Small Businesses

Senators Maggie Hassan (D-NH) and Todd Young (R-IN) introduced a bipartisan initiative to support research and development (R&D) investments made by small businesses and startup companies on March 17.

The American Innovation and Jobs Act proposed by Hassan and Young reverses a tax code change from 2017 (which took effect in 2022) that mandates small businesses amortize R&D investment deductions over five years. Previously, companies could deduct those innovation-focused investments as an expense the year they were made.

According to the National Small Business Administration (NSBA), the five-year amortization requirement negatively impacts small businesses in technology-related industries involved in SBIR and STTR programs by hurting their ability to attract investment and grow.

The proposed legislation is intended to support tech-related small businesses by reestablishing incentives for long-term R&D investments that companies can deduct every year, raising limits on refundable R&D tax credits, and widening eligibility standards that allow more startups to use refundable R&D tax credits.

The NSBA’s Small Business Technology Council recently drafted an open letter outlining its concerns to Congressional leaders earlier this month.

To view it, to go: https://sbtc.org/wp-content/uploads/2023/03/SBTC-Letter-to-Congress-on-Sec-174-Tax-and-SBIR.pdf.

To sign on to this letter, go to: https://forms.office.com/pages/responsepage.aspx?id=zmqnujzJ2EiSHb4KDccCDAraDOyrHMtFues5EEPK13pUMFRJR1RTRzVIQlVGVlA2OUJHM0o1RDBOUi4u.