FOR IMMEDIATE RELEASE
September 27, 2023
Contacts:
Andy Barnes, abarnes@cebn.org, Tel: 202-785-0507, ext. 1503
Washington, D.C. – Today the Clean Energy Business Network delivered a letter to Congress signed by a coalition of 30 cleantech organizations and allied trade associations urging lawmakers to permanently restore immediate expensing for the Sec. 174 R&D tax deduction, which lapsed in 2022. For the first time in nearly 70 years, businesses engaged in cutting-edge innovation are unable to fully deduct research and development (R&D) expenses in the first year incurred. This policy shift has forced businesses to cancel projects, lay off employees, or close shop entirely.
The U.S. is now one of just three developed countries with this restriction on firms’ ability to immediately deduct R&D expenses. EY projects the recent changes to Sec. 174 will cost up to 169,000 jobs and $10.1 billion in R&D investments annually.
Representatives of several organizations on the coalition letter provided the following statements:
Lynn Abramson, President, Clean Energy Business Network: “Legislation to restore immediate expensing for the R&D tax deduction has strong bipartisan, bicameral support—we just need to get it over the finish line. The current limitations to Sec. 174 threaten U.S. competitiveness in a range of technology sectors, from energy, to computing science, to healthcare. Small technology businesses across the nation—and the high-paying jobs they provide—depend on swift action ahead of the next tax season.”
Lisa Jacobson, President, Business Council for Sustainable Energy: “The Inflation Reduction Act provided clear market signals through the tax code for cleantech deployment. It is crucial that this long term business certainty extends to early stage innovation as well. Aligning the R&D tax deduction with other public and private investments will ensure that new technologies are ultimately brought to market, creating climate solutions, economic development, and jobs across the U.S.”
Ryan Fitzpatrick, Senior Director of the Climate and Energy Program, Third Way: “Stifling R&D makes the U.S. less competitive and risks ceding leadership to rivals like China. Lifting Sec. 174’s limitations not only has strong bipartisan support, but will spur American innovation across key clean energy technology sectors. For the sake of thousands of U.S. workers and our global economic competitiveness, Congress must take expeditious action to ease this restriction.”
Jere Glover, Executive Director, Small Business Technology Council: “When the changes to Sec. 174 from the Tax Cuts and Jobs Act of 2017 came into effect, the United States became one of only three developed countries in the world to require companies to amortize their R&D expenditures. Until Congress restores the immediate deduction of R&D expenses the U.S. will continue to lose ground to global competitors like China, as more and more American companies will simply decide that innovating is too expensive. This will particularly hurt high-tech small businesses, many of whom simply don’t have the cash available to amortize their expenses.”
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The Clean Energy Business Network (CEBN) is the small business voice for the clean energy economy, working to enhance opportunities for clean energy providers through policy support, market and technology education, and business development assistance.
