The American Innovation and Jobs Act makes changes to federal tax law to encourage business research and development spending. The bill restores immediate expensing for research and experimental costs, allowing companies to deduct these expenses in the year they're incurred rather than spreading deductions over time. It also significantly expands tax credits for startups and small businesses conducting research, increasing the refundable credit cap from $250,000 to eventually $750,000 by 2035 (rising in $25,000 increments annually beginning in 2025), and extends the eligibility window for these businesses from five to eight years. Additionally, the bill raises the gross receipts threshold for qualifying small businesses from $5 million to $15 million and increases the research credit rate for small businesses from 14 percent to 20 percent. These changes apply to tax years beginning after December 31, 2024, with some provisions retroactive to 2022, and are designed to make it easier for startups and established companies to invest in innovation and research activities.
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