WASHINGTON – Today, U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) and 34 of their Senate colleagues introduced the bipartisan American Innovation and Jobs Act, legislation that will expand and strengthen research and development (R&D) by small businesses and startups throughout the United States by extending and making permanent an expired tax cut that allowed businesses investing in R&D to claim tax credits and deductions when filing federal taxes.

“Research and development is critical to the success and competitiveness of American businesses and to protecting our status as a global leader in innovation and tech—especially as adversaries like China race to catch up,” said the senators. “At a time when President Trump is slashing federal funding for important research initiatives in everything from medicine to technology, we’re committed to doing all that we can to fight back. That includes introducing this bipartisan legislation to provide tax incentives to support the research and development investments we need to create jobs and stay on top.”

The American Innovation and Jobs Act would extend and make permanent the ability of small businesses and startups that invest in R&D to claim a tax credit or deduct their investments when filing federal taxes. It would also permanently restore full expensing of R&D costs while allowing businesses to retroactively take advantage of the deduction for the tax years during which full expensing had expired.

Specifically, the American Innovation and Jobs Act would:

• Expand support for innovative startups by:
  • Immediately doubling the cap on the refundable R&D tax credit from $250,000 to $500,000, and ultimately raising it to $750,000 over ten years.
  • Expanding access to the R&D tax credit for startups by lowering certain threshold needed to qualify.
• Expand the number of startups eligible to use the refundable R&D credit by:
  • Increasing the eligibility threshold from $5 million to $15 million in gross receipts.
  • Increasing the period during which startups can claim the credit from 5 years to 8 years after beginning to generate at least $25,000 in revenue.

The legislation is endorsed by the R&D Coalition, which includes companies of all sizes and many trade associations, including the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers, and the Information Technology Industry Council.

In addition to Warner and Kaine, the legislation is cosponsored by U.S. Sens. Todd Young (R-IN), Maggie Hassan (D-NH), James Lankford (R-OK), Jeanne Shaheen (D-NH), Steve Daines (R-MT), John Barrasso (R-WY), Jacky Rosen (D-NV), Thom Tillis (R-NC), Gary Peters (D-MI), Roger Marshall (R-KS), Alex Padilla (D-CA), Tommy Tuberville (R-AL), Patty Murray (D-WA), John Kennedy (R-LA), Amy Klobuchar (D-MN), Pete Ricketts (R-NE), Mark Kelly (D-AZ), Katie Britt (R-AL), Shelley Moore Capito (R-WV), Catherine Cortez Masto (D-NV), Deb Fischer (R-NE), Tammy Baldwin (D-WI), Jerry Moran (R-KS), Ben Ray Luján (D-NM), Bill Hagerty (R-TN), Chris Coons (D-DE), Markwayne Mullin (R-OK), Elissa Slotkin (D-MI), Roger Wicker (R-MS), Angus King (I-ME), Ted Budd (R-NC), Jon Ossoff (D-GA), Jon Husted (R-OH), and Martin Heinrich (D-NM).

Full text of the bill is available here.

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