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AdvaMed Statement on House Passage of Critical R&D Tax Provision


AdvaMed, the Medtech Association, released the following statement from President and CEO Scott Whitaker upon the passage of a research and development expensing tax provision critical to medtech innovation in the House of Representatives. The provision, which is part of the bipartisan, bicameral Tax Relief for American Families and Workers Act of 2024, would delay a change requiring businesses to deduct their research and development expenses over five years, instead allowing immediate deduction. Earlier this month, Whitaker urged Congress to approve the provision.

“R&D is critical to the medtech innovation upon which so many American patients rely. The way R&D expensing is handled under current tax law is especially challenging for the small and emerging companies that make up more than 80 percent of the medtech industry. This critical change to tax policy will unquestionably lead to greater innovation on behalf of the patients our industry serves. We appreciate the strong bipartisan vote tonight in the House and hope the Senate agrees that this important tax policy change would be a big step forward for patients.”

Under current law, research or experimental costs paid or incurred in tax years beginning after December 31, 2021, are required to be deducted over five years. The new provision delays the date when taxpayers must begin deducting those expenses over five years until after December 31, 2025.

The five-year deduction requirement is especially hard for small and emerging companies, which are critical to driving innovation and improving patient outcomes. Research and development funding is expensive and hard for small companies to afford, given their narrow operating margins.

In his letter to lawmakers earlier this month, Whitaker cited the example of Alva Health, a small company that wrote that the tax provision, if unfixed, would cause “delays in getting our lifesaving stroke detection product into the hands of patients in need.” He went on to write, “For the patients we serve, who rely on the technologies our industry develops, we are pleased to see this provision to fix the damaging change to Section 174 advance and encouraged by the prospect of timely enactment this year.”

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