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ICYMI: R&D tax deductions are now amortized over five years—but you can take action to help restore R&D tax exemptions and support innovation. New York recently became the first state to regulate the treatment of seeds with neonicotinoids—here’s why it matters. (526 words, 2 minutes, 37 seconds) |
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R&D tax exemptions drive innovation – act now to support them |
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As of 2022, R&D expenses are amortized over five years instead of deducted immediately, making it harder for companies to develop new medicines. BIO is urging action on a bipartisan bill to revive R&D tax exemptions. Why it matters Industries with exceptionally high R&D costs—including drug development and agricultural and industrial biotechnology—can require hundreds of millions of dollars and years of work before the research pays off. Amortizing R&D expenses over five years means that instead of 100%, companies can now only deduct 20% each year of amounts spent on innovation.
A competitive disadvantage: The R&D deduction has been an important part of the U.S. tax coded since 1954. Most other countries maintain robust R&D tax incentives, and China gives an effective 200% deduction on R&D spending.
A typical biotech scenario: Sutro Biopharma has spent 20 years researching a breakthrough cancer drug and raised about $750 million through co-licensing. But their partners will not see returns until the innovation is approved and hits the market, Bio.News reports.
What they’re saying: “This is an issue that really affects every biotech company,” Sutro Biopharma CEO Bill Newell told us. “We want to put all the capital that we raise into new medicines. We want to benefit patients. When we generate revenue from sales of our medicines, we will pay taxes.”
There is a solution: The bipartisan American Innovation and Jobs Act, if passed by Congress, would eliminate R&D amortization, and research would again be non-taxable.
Join BIO’s action campaign: Tell Congress to restore R&D tax exemptions by passing the American Innovation and Jobs Act—click here to learn more and take action today. |
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NY law on seed treatment impacts agricultural biotechs |
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New York recently became the first state to regulate the treatment of seeds with neonicotinoids, a pesticide commonly used in traditional and biotech seeds. Why it matters: Protecting seeds with neonicotinoids greatly reduces the use of pesticides over the life of the plant while protecting products offered by seed producers. That’s why no state had regulated neonicotinoids until New York’s law, signed late last month.
It’s mostly a bureaucratic obstacle: The New York law takes effect in 2029. It would still allow farmers to obtain a waiver for using neonicotinoid-treated seeds if they provide an assessment showing their land needs protection and if they undergo a training program.
The impact: “BIO members will need to work closely with New York farmers to make sure they’re aware of these changes and make sure farmers take the necessary steps to be able to continue to use this important technology,” BIO’s Gene Harrington tells Bio.News.
Regulation is delaying biotech alternatives to pesticides. Plant-incorporated protectants (PIPs) involve genetically altering plants to withstand pests or other harms without chemicals. The Environmental Protection Agency’s latest PIPs regulations do not provide the clarity biotechs need, Harrington says.
What’s next: BIO and other stakeholders have been offering input on neonicotinoid seed legislation, which is also being considered in California, Connecticut, Minnesota, New Jersey, and Vermont. |
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President Biden’s Tuesday: No official events scheduled.
What’s Happening on Capitol Hill: After crafting a deal Sunday on a continuing resolution to maintain government spending, Congress has until Friday to pass it, per CBS. The Senate Health, Education, Labor, and Pensions Committee has scheduled a hearing for Thursday on advancing research and improving care for long COVID. |
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