Congress may consider pending tax provisions during the lame duck session before the end of 2022 as it also works to provide funding for federal agencies.
A key priority for the engineering industry is securing a fix for the research and development (R&D) amortization requirement that took effect on January 1, 2022. Originally enacted in the Tax Cuts and Jobs Act of 2017 with a delayed effective date, this provision changes how firms deduct their R&D expenses. Businesses used to be able to write off R&D expenses in the year they were incurred, but starting in 2022, they must write them off over five years in most cases. This has created a cash flow problem for engineering firms and other industries. There is significant bipartisan support for at least delaying the amortization requirement, but a legislative vehicle is needed.
A tax bill or tax title to an appropriations bill could also address limits on interest deductibility that took effect in 2022 and the phaseout of capital expensing that will begin in 2023. It is unlikely that a tax bill requiring Democratic support in Congress could move forward with only business-related provisions. The top priority for Democrats is extending the expanded child tax credit, which expired at the end of 2021.