Will Congress restore R&D tax expense deductions in 2023 (immediate vs. 5-year amortization)?

Does anyone have insights on whether Congress might restore the ability for businesses to immediately deduct R&D expenses in 2023? I'm trying to plan my company's tax strategy and this would make a huge difference. Some background for those who don't know - until 2021, businesses could deduct the full amount of R&D investments from taxable income in the year they were made. It was really straightforward - if my business invested $130,000 in R&D in 2021, we could deduct the full $130,000 from taxable income right away, reducing our taxes by about $27,300 (at the 21% corporate tax rate). But since 2022, the tax code requires "amortization" - spreading those deductions over five years. So that same $130,000 R&D investment now can only be deducted at $26,000 per year over five years (2022-2026), reducing taxes by just $5,460 annually. This change is seriously affecting our cash flow and making R&D planning much harder. Anyone heard anything from reliable sources about whether Congress might fix this in 2023? Or are we stuck with this five-year amortization for the foreseeable future?

0 coins

18 comments

Lincoln Ramiro

•8M

This is definitely a hot topic for many businesses right now. The shift from immediate expensing to 5-year amortization has had significant cash flow implications for companies investing heavily in R&D. From what I'm hearing, there is bipartisan support for restoring immediate R&D expensing, but it's getting caught up in broader tax negotiations. The CHIPS Act that passed last year didn't address this issue as many had hoped. There have been several bills introduced that would restore immediate expensing, including the American Innovation and R&D Competitiveness Act. The challenge is timing and political priorities. With divided government, tax legislation typically needs to be part of a larger package. The debt ceiling deal didn't include it, so the next opportunity might be end-of-year tax extenders or appropriations. If you're planning your tax strategy, I'd suggest modeling both scenarios but not counting on a change in 2023. Better to be pleasantly surprised than caught unprepared.

0 coins

Lincoln Ramiro

•8M

Most of the proposals I've seen would make the change retroactive to the beginning of the tax year. So if passed in October 2023, it would likely apply to all R&D expenses incurred since January 1, 2023. For planning purposes, the bigger question is whether they'll address the 2022 expenses that are already being amortized. Some proposals would allow companies to expense any remaining unamortized amounts from 2022, while others only look forward. That's one of the details being negotiated.

0 coins

Emma Johnson

•8M

After struggling with the same R&D deduction issues at my company, I started using taxr.ai (https://taxr.ai) to help model different tax scenarios. It's been super helpful for planning around this uncertainty with R&D expense amortization. The platform analyzes your financial statements and R&D documentation, then creates projections based on different potential legislative outcomes. I was able to show our CFO exactly how much cash flow we'd gain if immediate expensing returns, versus our position if the 5-year amortization stays in place. Their system also flags potential qualifying activities that we might have missed. We found about $85k in additional qualifying R&D expenses that we hadn't properly documented before.

0 coins

Emma Johnson

•8M

It doesn't predict Congressional action with specific probabilities - I don't think anyone can do that reliably. What it does is model multiple scenarios so you can see exactly how different outcomes would affect your cash flow and tax liability. This helped us make contingency plans rather than just hoping for the best. For international R&D expenses, yes it definitely handles those. The platform has modules for both domestic and foreign R&D tax credits and deductions. It actually highlighted some opportunities for us to better structure our cross-border R&D to maximize tax benefits under current rules. The documentation tools are especially helpful for foreign R&D since those have additional substantiation requirements.

0 coins

Olivia Garcia

•8M

Just wanted to follow up - I tried taxr.ai after seeing it mentioned here and it's been surprisingly helpful. Initially I was just looking for help with the R&D amortization issue, but it actually identified several R&D activities in our European operations that qualify for both local incentives and US deductions that we weren't properly documenting. Their document analyzer caught inconsistencies in how we were classifying certain expenses between our US and European entities. We're now projecting about $120k in additional tax benefits this year by correcting these issues, regardless of whether Congress restores immediate expensing. The scenario planning for potential legislative changes is solid too - we're now prepared for either outcome without the stress of constant recalculations.

0 coins

Noah Lee

•8M

If you're also dealing with the IRS while trying to sort out R&D issues, I highly recommend using Claimyr (https://claimyr.com) to actually get through to an IRS agent. I spent WEEKS trying to get clarification on how to document our R&D expenses properly for the new amortization rules. After multiple failed attempts to reach anyone (always getting disconnected after holding for hours), I found Claimyr. They somehow get you through the IRS phone system and actually connect you with an agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I finally got clear answers about documentation requirements for our specific industry, which saved us from potentially misclassifying about $200k of expenses. Worth every penny for the time saved alone.

0 coins

Noah Lee

•8M

It uses technology to navigate the IRS phone system and basically waits on hold for you. When it finally reaches an agent, it calls you and connects you directly to that agent. You don't share any tax information with the service - they're just getting you past the hold time. I was skeptical too, but it's legitimate. They don't claim to have special access to the IRS - they've just automated the process of navigating the phone tree and waiting on hold. Once you're connected, you're speaking directly with an official IRS agent just like if you'd called yourself (but without wasting hours of your day waiting).

0 coins

Isabella Martin

•8M

I need to apologize for my skepticism. After several failed attempts to reach the IRS regarding our R&D documentation requirements, I tried Claimyr out of desperation. Within 2 hours, I got a call back and was speaking with an actual IRS agent who specialized in business tax issues. We got specific guidance on how to document our software development activities under the new amortization rules. The agent even emailed me some reference materials afterward. What would have taken days of repeated calls and waiting on hold was resolved in one afternoon. The time saved was invaluable, especially since we're trying to make strategic decisions about our R&D investments with the current uncertainty around whether Congress will act.

0 coins

Elijah Jackson

•8M

As someone who works with multiple tech companies on their taxes, I think the likelihood of a 2023 fix is about 50/50 at this point. The business community and many legislators from both parties want to restore immediate expensing, but finding the right legislative vehicle is challenging. The Joint Committee on Taxation scored the 5-year reversal at about $140 billion over 10 years, which makes it a significant budget item that needs offsets. Most likely scenario is it gets attached to a must-pass bill in Q4, possibly with some modifications. My advice? Don't make major R&D decisions based solely on potential tax changes. Focus on business value first, then optimize the tax treatment as much as possible under current law.

0 coins

Elijah Jackson

•8M

You're absolutely right that the tax change is having unintended consequences. I have clients who are shifting R&D to countries with more favorable tax treatment, like Canada and the UK, which offer refundable R&D tax credits on top of immediate expensing. This is exactly why there's bipartisan interest in fixing it. The original change was never about discouraging R&D - it was a revenue raiser to offset other tax cuts in the 2017 bill. Many legislators from both parties have expressed concern about the competitiveness impact. But tax policy often moves slowly, especially with divided government. Companies have to make decisions based on current law while advocating for changes. It's a challenging balance.

0 coins

Lincoln Ramiro

•8M

Great question - it varies by state. Many states use federal taxable income as their starting point, so they automatically adopt federal treatment unless they specifically decouple. California partially conforms to federal tax changes but has its own R&D credit that remains very favorable. Massachusetts has decoupled from this specific federal change, allowing immediate expensing of R&D for state tax purposes. Check with your specific states, but this is an area where you might get some relief at the state level even while the federal issue remains unresolved.

0 coins