H.R. 1990: American Innovation and R&D Competitiveness Act of 2025

In 2017, the Tax Cuts and Jobs Act quietly planted a time bomb in Section 174 of the tax code: starting in 2022, companies could no longer immediately deduct R&D spending. Instead, they’d have to amortize those costs over 5 years — or 15 years for overseas research. The result was devastating. Section 174 helped trigger massive tech layoffs, with estimates that the rule destroyed tens of thousands of American jobs in its first year alone, with small businesses hit hardest.

The damage extends far beyond layoffs. The OBBBA restored favorable treatment for domestic R&D in 2025, but that fix only applies going forward — companies that paid billions in extra taxes from 2022-2024 got no relief. Startups with no revenue but heavy R&D spending were suddenly stuck carrying massive tax liabilities they couldn’t offset. A coalition of over 260 organizations signed on to push for repeal, calling the amortization rule the single biggest threat to U.S. competitiveness in decades.

Congress temporarily fixed the problem through the One Big Beautiful Bill Act in 2025, but that relief is set to expire. HR1990 — with 81 bipartisan cosponsors — would make immediate R&D expensing permanent by rewriting Section 174 back to its pre-2022 form. The bill is retroactive to 2022, meaning companies could reclaim years of locked-up deductions. With China spending over $495 billion on R&D in 2024 alone — growing at 8.3% annually — supporters argue the U.S. can’t afford to treat innovation as a capital expense.