AdvaMed Urges Congress to Pass R&D Tax Provision Promoting, Preserving Medtech Innovation

Scott Whitaker, president and CEO of AdvaMed, the Medtech Association, today urged Congress to enact a research and development expensing tax provision critical to medtech innovation. The provision would delay a change requiring businesses to deduct their research and development expenses over five years, allowing immediate deduction.

“Research and development is essential to the creation of safe, innovative, and effective medtech devices and diagnostics,” Whitaker wrote U.S. House and Senate leaders. “The process of developing these new therapies and treatments is expensive and challenging for small, emerging companies to afford. Navigating a tax liability over five years produces an undue hardship for these companies, threatening to force many of the most innovative and promising medical technologies to wither on the vine.”    

The research and development provision, under tax code Section 174, is part of the bipartisan, bicameral Tax Relief for American Families and Workers Act of 2024 that passed out of a key House committee soon after introduction.

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 account for more than 80 percent of the medtech industry and 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, 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.”

Whitaker wrote to congressional leaders, “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.”    

Whitaker’s letter is available here.