Marketplace Tech Federal tax incentives could mean more tech research and innovation
Jul 14, 2025
A recent tax provision could revolutionize tech research and innovation! The discussion delves into how new legislation allows immediate R&D expense deductions, potentially revitalizing investment. Small startups may face different challenges compared to giant tech firms under these reforms. Learn about the historical context of U.S. tax regulations and their impact on innovation compared to other countries. Finally, discover how strategic tax incentives can lower risks for companies, encouraging a vibrant landscape of technological advancement.
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Impact of 2017 Tax Cut on R&D
- The 2017 tax change requiring firms to spread R&D deductions over five years increased the cost of research and development.
- This raised expenses led to reduced R&D spending and employment, contributing to a tech industry slowdown in 2022.
New Tax Law Benefits Innovators
- The new tax law reverses the 2022 change, restoring immediate deductibility of R&D expenses.
- Small startups may benefit the most, receiving refunds and cash infusions that can support innovation.
Tax Certainty Fuels Innovation
- For small startups, tax benefits are critical because future financial forecasts are uncertain.
- Permanently reinstating the R&D deduction reduces uncertainty and encourages firms to invest in innovation.