H.R. 1990: American Innovation and R&D Competitiveness Act of 2025
Sponsor
Ron Estes
Republican · KS-4
Bill Progress
Latest Action · Mar 10, 2025
Referred to the House Committee on Ways and Means.
Reversing the R&D tax that hit profitless startups
Why it matters
Starting in 2022, U.S. companies could no longer deduct research costs the year they spent them. They had to spread them over five years, or fifteen for research done overseas. The result hit hardest where it hurt most: money-losing startups got federal tax bills on spending that produced no profit. H.R. 1990 would restore the immediate write-off, make it permanent, and apply it retroactively to 2022 so companies could recover what they over-paid.
For decades, a company could deduct what it spent on research the same year it spent it. A 2017 tax law quietly changed that. Starting in 2022, businesses had to spread those costs over five years, or fifteen years for research done abroad.
That broke the math for companies that lose money on purpose. A pre-revenue startup that burned $1 million on engineering could suddenly deduct only a fraction of it, leaving it with taxable "income" it never actually earned and a real tax bill it couldn't pay. Industry groups blamed the change for layoffs and a scramble of amended returns, and a coalition of more than 260 organizations pushed Congress to repeal it.
H.R. 1990, the American Innovation and R&D Competitiveness Act of 2025, rewrites that part of the tax code back to its pre-2022 form. Companies could once again deduct research costs in full the year they incur them, or elect to spread them over at least five years if they prefer.
Two things make this more than a technical cleanup. It's permanent, and it's retroactive to tax years beginning after 2021, so companies that over-paid from 2022 through 2024 could go back and reclaim those deductions. Congress already restored immediate expensing for domestic research through the One Big Beautiful Bill Act in 2025, but supporters note that relief largely left foreign research behind and wasn't locked in the way this bill would be. With 81 bipartisan cosponsors, backers frame it as a competitiveness fix; critics weigh it against the lost revenue.
H.R. 1990 Bill Summary
What H.R. 1990 actually does.
Deduct R&D the year you spend it
Lets a business write off the full cost of research and experimental work in the year it's paid or incurred, instead of spreading it across multiple years.
Retroactive to 2022
Applies to tax years beginning after December 31, 2021, so companies that capitalized research costs from 2022 through 2024 could amend returns and reclaim those deductions.
Use it your first year without IRS permission
A taxpayer can adopt the immediate-deduction method on its own for the first year it has qualifying research expenses, with no advance approval from the IRS.
Switch to it later with IRS consent
A business already using another method can move to immediate expensing in a later year with the Secretary's approval.
Optional five-year spread
A company that would rather not deduct everything at once can elect to amortize qualifying research costs over a period of at least 60 months.
Coordinates with the federal research credit
Rewrites the rule that prevents claiming both a full deduction and the research credit for the same dollars, preserving the long-standing reduced-credit election.
Who benefits from H.R. 1990?
Pre-revenue startups
Founders who spend heavily on engineering before earning a dollar stop being taxed on money they never made. This is the group the 2022 rule hit hardest.
R&D-heavy small businesses
Smaller firms without big tax departments get back the simple, immediate write-off they relied on for decades, easing cash flow in the years they invest most.
Manufacturers and tech companies
Lowers the after-tax cost of developing new products and processes. The National Science Foundation reports U.S. businesses spent about $722 billion on R&D in 2023.
Companies with overseas research
Restores immediate deductions for research done abroad, which the 2025 domestic fix generally left on a longer write-off schedule.
Who is affected by H.R. 1990?
The U.S. Treasury
Faster deductions mean the government collects less revenue, especially in the years companies catch up on 2022 through 2024.
Companies that already amortized
Firms that capitalized research costs since 2022 would need to file amended returns or accounting-method changes to claim the restored deductions.
Tax preparers and CFOs
Research-cost planning, credit elections, and prior-year amendments all change, creating a near-term compliance workload.
The federal deficit
Any revenue the bill gives up adds to the gap unless it's offset elsewhere.
HR1990 Legislative Journey
House: Committee Action
Mar 10, 2025
Referred to the House Committee on Ways and Means.
About the Sponsor
Ron Estes
Republican, Kansas's 4th congressional district · 9 years in Congress
Committees: Joint Economic Committee, Ways and Means, the Budget
View full profile →
Cosponsors (81)
This bill has 81 cosponsors: 41 Democrats, 40 Republicans, reflecting bipartisan support. Cosponsors represent 34 states: Alabama, Arizona, California, and 31 more.
John Larson
Democrat · CT
Vern Buchanan
Republican · FL
Suzan DelBene
Democrat · WA
Adrian Smith
Republican · NE
Terri Sewell
Democrat · AL
Mike Kelly
Republican · PA
Donald Beyer
Democrat · VA
David Schweikert
Republican · AZ
Jimmy Panetta
Democrat · CA
Darin LaHood
Republican · IL
Steven Horsford
Democrat · NV
Jodey Arrington
Republican · TX
Committee Sponsors
Ways and Means Committee
31 of 45 committee members cosponsored
2 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 1990 change?
2 changes
Sections Amended
Section 174 of Internal Revenue Code of 1986
read as follows: ``SEC
Section 280C(c) of such Code
read as follows: ``(c) Credit for Increasing Research Activities
H.R. 1990 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Policy
- Taxation
- Introduced
- Mar 10, 2025
Referred to the House Committee on Ways and Means.
Mar 10, 2025
Official Sources
Official bill text, cosponsors, and legislative history for the American Innovation and R&D Competitiveness Act of 2025
The section of the Internal Revenue Code that HR 1990 would rewrite to restore immediate R&D expensing
The research credit statute referenced in HR 1990's conforming amendments to Section 280C(c)
IRS guidance on claiming the Section 41 R&D tax credit, including Form 6765 and audit guides
IRS guidance on how businesses must currently capitalize and amortize R&D costs — the rules HR 1990 would eliminate
IRS summary of the 2025 law that already restored immediate expensing for domestic research under new Section 174A — the partial fix HR 1990 would make permanent and extend to foreign research
97-page committee report detailing how R&D amortization requirements hurt small businesses state by state
National Science Foundation data showing U.S. businesses spent $722 billion on R&D in 2023, the authoritative baseline for measuring the bill's impact
H.R. 1990 Common Questions
Can businesses deduct R&D expenses immediately again under H.R. 1990?
Yes. The bill rewrites the tax code so a company can deduct research and experimental costs in full the year it pays or incurs them, instead of spreading them over five years. It's the rule that was in place before a 2017 law changed it starting in 2022.
Is H.R. 1990 retroactive — can companies recover taxes paid from 2022 to 2024?
Yes. It applies to tax years beginning after December 31, 2021. Companies that were forced to capitalize research costs from 2022 through 2024 could amend those returns and claim deductions they couldn't take at the time.
Didn't the One Big Beautiful Bill Act already restore R&D expensing?
For domestic research, largely yes. Congress restored immediate expensing for U.S.-based research in the 2025 law. H.R. 1990 goes further: supporters note it makes the fix permanent, reaches back to 2022, and doesn't carve out research done overseas.
Does H.R. 1990 cover foreign research, or only U.S.-based R&D?
Both. The bill rewrites the rule with no separate, slower treatment for research done abroad, so foreign R&D would also be immediately deductible. The 2025 domestic fix generally kept overseas research on a longer write-off schedule.
Can a startup use the immediate deduction in its first year without IRS approval?
Yes. A taxpayer can adopt the immediate-deduction method on its own for the first year it has qualifying research expenses, with no advance consent from the IRS. Switching to it in a later year does require the IRS's approval.
Can a company still claim the federal research credit if it deducts R&D under H.R. 1990?
Yes, with the usual coordination rule. A business generally can't take both the full deduction and the research credit for the same dollars. It reduces the deduction by the credit amount, or makes the long-standing election for a reduced credit instead.
What would H.R. 1990 cost the federal government?
Congressional scorekeepers haven't scored this specific bill. It raises no spending; it reduces revenue by letting companies deduct research sooner. Similar restorations of full R&D expensing have been estimated in the tens of billions over a decade, more with retroactive relief.
Has H.R. 1990 passed, and what's its status?
No. It was introduced in March 2025 and referred to the House Ways and Means Committee, where it has 81 bipartisan cosponsors but no committee vote yet. Its likeliest path is being folded into a broader tax package.
Based on H.R. 1990 bill text
H.R. 1990 Bill Text
“To amend the Internal Revenue Code of 1986 to restore the deduction for research and experimental expenditures.”
Source: U.S. Government Publishing Office
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