ACT | The App Association has announced the permanent restoration of full tax deductibility for domestic research and development expenses, benefiting small tech companies.
“This is a huge win by small tech for small tech. The App Association and our members succeeded where others had failed,” stated Morgan Reed, president of ACT | The App Association. “We are proud to see all our work come to fruition. Small tech companies are the leading edge of innovation, moving more quickly and nimbly to bring new products and services to market. This change heals the wound policymakers made to American businesses that disproportionately affects our members.”
The final version of the law includes provisions that assist small tech companies and enhance American competitiveness:
Permanent Full Expensing of the Deduction: Instead of a temporary measure, the law now offers a permanent deduction, providing predictability and security for small tech companies investing in new products and services in areas like AI, internet of things, and quantum computing.
Targeted Retroactive Full Expensing to 2022: Small businesses with average annual gross receipts of $31 million can reclaim tax overpayments and reinvest in innovation. This approach aims to relieve American businesses most negatively impacted, reversing changes in development schedules and hiring plans that affected members of The App Association.