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ACEC Urges Congress: Fix R&D Tax Now

ACEC Urges Congress: Fix R&D Tax Now

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This week, the American Council of Engineering Companies (ACEC) launched a national ad campaign urging Congress to repeal the 5-year amortization mandate of research and development (R&D) expenses before the end of the year.

The six-figure ad buy will run nationally on cable and streaming platforms, with additional television and radio ads running in Washington, D.C. throughout November.

Without urgent action from Congress, many engineering firms are facing crushing tax bills, which threaten their ability to hire new employees, take on additional projects, or, in some cases, stay in business.

The tax change that went into effect in 2022 is forcing engineering firms to amortize R&D costs over five years, instead of deducting expenses the year they occurred. Engineering firms throughout the United States conduct research and development to remain competitive and offer innovative solutions to complex client challenges.

“There is no question that the R&D tax issue is punishing America’s engineering industry for innovating, making it harder for engineering firms to hire the talent they need to develop the solutions the country needs right now,” said ACEC Board Chair Jay Wolverton. “Lawmakers need to understand that if Congress doesn’t get this fixed, they’re going to put small businesses out of work and stifle job creation and economic growth.”

New research from the ACEC Research Institute shows 58% of engineering firms surveyed indicated they invest in R&D, and among those impacted, 87% expect the tax change to have a negative impact. The average loss from the tax change is $1.5 million with the median loss sitting at $400,000. That is money that cannot be reinvested in hiring and retaining workers at a time when the industry is already facing a shortage of engineers.

The ad is one component of a much larger public affairs campaign that will elevate the issue with Members of Congress. ACEC has developed the website EngineerInnovation.com to share real stories from impacted firms. One such small-business story is from Chris Anderson, President and CEO of DJ&A, P.C., an environmental engineering firm in Montana.  Looking at the impact of the new tax law, Chris said, “If you do the math, it would have been better for us not even to have been in business in 2022.”

ACEC and its members have been in Washington meeting with lawmakers on the issue, with more than 100 members in town in September. The group will continue to press Congress for a fix to restore a business climate that encourages engineering innovations, like those that lead to cleaner air and water and safer buildings and bridges.

“This ad campaign reminds lawmakers how vital engineers are to our communities and the dire consequences if this law isn’t fixed,” said Wolverton.

The American Council of Engineering Companies (ACEC) is the business association of the nation’s engineering industry. Founded in 1909, ACEC is a national federation of 51 state and regional organizations representing more than 5,500 engineering firms and 600,000+ engineers, surveyors, architects, and other specialists nationwide. ACEC member firms drive the design of America’s infrastructure and the built environment.

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