Pappas Pushes to Lower Small Business Taxes
Pappas is working to restore tax policy changed under 2017’s Tax Cuts and Jobs Act (TCJA), which no longer allows small businesses investing in research and experimentation to deduct those expenses immediately. This has increased costs for entrepreneurs and disincentivizes vital research and development.
This week, Congressman Chris Pappas (NH-01), a small business owner and member of the House Committee on Small Business, advocated for lower taxes for small businesses by restoring common sense tax policy that incentivizes investments in research and innovation.
The 2017 Tax Cuts and Jobs Act included a change to Internal Revenue Code Section 174, which took effect in 2022 and impacted taxpayers for the first time this filing season. Before this change, research and experimentation (R&E) expenses could be deducted in the year they were incurred. This allowed for significant cost recovery and savings for businesses and entrepreneurs. Under the 2017 law, R&E expenses must now be amortized over five years, which results in substantial tax and cost increases for many businesses.
During the hearing, Pappas shared the experience of one New Hampshire business that has seen its tax burden more than double because of this change in the law.
“Small businesses in New Hampshire should not be penalized by the federal government for investing in critical research and innovation,” said Congressman Chris Pappas. “The change in the 2017 legislation contradicts 70 years of prior law in which all research and experimentation expenditures could be immediately expensed in the year accrued. A return to the prior policy would significantly reduce the tax burden small businesses face and incentivize the entrepreneurial risk-taking and innovation that is vital to growing our economy and ensuring we continue to outcompete the world. I will support and work to pass upcoming bipartisan legislation to restore the previous policy, and I remain committed to working across the aisle to ensure we create a tax environment that lowers small business costs, creates good-paying jobs, and rewards innovation.”
Later in the hearing, Pappas highlighted his continued leadership in lowering costs for small businesses, including introducing bipartisan legislation to eliminate the Federal Excise Tax on large trucks and trailers - the largest tax of its kind in the country.
Click here to watch Congressman Pappas’s remarks to the House Committee on Small Business.