The Next Step for R&D Expensing: What Saturday’s Senate Vote Means for Your Business

On Saturday, the Senate took a significant step forward by voting 51–49 to advance the “One Big Beautiful Bill,” a legislative package that could restore 100% immediate expensing of research and development (R&D) costs under Section 174 of the tax code. Importantly, this proposal also includes the potential for retroactive application to 2022 expenses for small businesses, offering an immediate boost to cash flow.

What’s Next in the Legislative Process?

While this vote signals strong momentum, the bill has not yet become law. Key steps remain:

• Senate debate and possible amendments

• Final Senate vote, currently targeted for around July 4

• Approval or reconciliation by the House of Representatives

• Presidential signature

Each of these stages will be critical in determining the final shape and timing of the changes.

Why This Matters

If enacted, this bill would:

• Restore the ability to immediately deduct 100% of domestic R&D expenses in the year incurred, reversing the amortization rules established in 2017 under the Tax Cuts and Jobs Act (TCJA).

• Offer small businesses a retroactive deduction for R&D costs from 2022–2024, potentially unlocking cash flow sooner than expected.

• Provide the strongest policy signal in recent years encouraging innovation and investment in research.

Additionally, the bill includes proposed changes to Section 179D relating to energy-efficient commercial buildings. If passed as currently written, deductions for new construction projects would be phased out 12 months after enactment.

What Should Businesses Do Now?

Given the potential impact, it’s crucial for businesses engaged in R&D activities to:

• Review past and current R&D expenditures to evaluate eligibility and maximize benefits.

• Stay informed on legislative developments as the bill progresses through Congress.

• Begin preparing for potential changes in tax filing strategies to optimize cash flow and compliance.

At EPSA USA, we are closely monitoring these developments and stand ready to help you navigate the evolving tax landscape. If you have questions or want to discuss how these changes could affect your business planning, please contact us today.