One Mic Stand: Federal R&D Tax Credit Update with Global Tax Management

In 2017, Congress, in an effort to fund the Tax Cuts and Jobs Act, implemented a provision that hinders companies from fully counting R&D costs, including payroll, as legitimate expenses. Instead, they mandated the amortization of these expenses over five years. This change, effective from tax year 2022, resulted in a substantial increase in federal tax liabilities for many businesses.

Because the implementation of this bill wasn't set to go into effect until five years later, many business leaders failed to notice the change and were caught flat-footed with enormous increases in their 2022 tax liabilities. 

More alarmingly, the impact of this change on America's economy has been profound.  According to a National Association of Manufacturers' review of data from the Bureau of Economic Analysis, American R&D spending fell from a five-year average growth rate of 6.6 percent to just 1 percent after the new provisions were implemented in 2022. 

Jonathan Forman of Global Tax Management addressed a standing-room-only crowd about the business-crushing implications of not fixing this part of the tax code. Jonathan stepped up to the One Mic Stand to give us a synopsis of the situation and insight to a proposed remedy. 

Get more insight and contact your elected officials here.