ACT | The App Association Secures Research & Development Tax Deduction for Small Tech

WASHINGTON – ACT | The App Association celebrates the permanent restoration of full tax deductibility for domestic research and development expenses, an invaluable investment incentive for 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,” said 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.”

How the final version helps small tech companies and American competitiveness:

1. Permanent Full Expensing of the Deduction
   Rather than kicking the can down the road for five years, the final law re-establishes a permanent deduction, giving small tech companies the predictability and security they need to make big investments in new products and services, especially in emerging technology areas like AI, internet of things, and quantum computing.
2. Targeted Retroactive Full Expensing to 2022
   Affected small businesses with average annual gross receipts of $31 million will be able to reclaim tax overpayments and reinvest in innovation. This targeted approach ensures that the American businesses most negatively affected receive relief. The drastic changes to development schedules and hiring plans that App Association members were forced to make as a direct negative impact can now be reversed. Retroactivity heals this wound that put American business at a competitive disadvantage with foreign businesses.

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