American Innovation and Jobs Act

This bill amends the Internal Revenue Code to enhance tax benefits for research activities, including restoring immediate expensing for research and development investments, expanding the refundable research credit for new and small businesses, and increasing access to the research credit for startups.

Sec. 2, Restoring immediate expensing for research and development investments: This section amends Section 174 of the Internal Revenue Code to allow taxpayers to treat research or experimental expenditures as deductible expenses in the year paid or incurred, rather than capitalizing them. It also allows an election to amortize such expenditures over at least 60 months. The section excludes expenditures for land, depreciable property, and mineral exploration, and limits eligibility to reasonable amounts. Conforming amendments update related code sections. These changes apply to amounts paid or incurred in taxable years beginning after December 31, 2021.

Sec. 3, Expanding refundable research credit for new and small businesses: This section increases the cap on the refundable portion of the research credit for qualified small businesses. The cap rises from $250,000 to $500,000 for taxable years beginning after December 31, 2024, and before January 1, 2026, then increases in $25,000 increments each year, reaching $750,000 for taxable years beginning after December 31, 2034. It also extends the startup eligibility period from 5 to 8 taxable years, raises the gross receipts test threshold from $5,000,000 to $15,000,000, and adds a $25,000 gross receipts exclusion. These amendments apply to taxable years beginning after December 31, 2024.

Sec. 4, Increasing access to the research credit for startups: This section adds special rules for qualified small businesses under the research credit calculation. For such businesses, the fixed-base percentage used in the regular research credit is increased from 14% to 20%. If the alternative simplified method applies, the taxpayer may elect to use 10% instead of 6%, or disregard years with no qualified research expenses when calculating the average. This amendment applies to taxable years beginning after the date of enactment.