AZTC Advocacy Update: Full R&D Expensing Restored, a Boost for Arizona Tech Companies
The Arizona Technology Council is celebrating a major legislative win for innovation and tech-driven businesses across our state and the nation. Last week, Congress passed legislation that includes critical reforms to Section 174 of the U.S. tax code, restoring full and permanent expensing for research and development (R&D) investments, a long-standing priority for the Council and the tech industry nationwidie.
This milestone follows more than three years of sustained advocacy by the Technology Councils of North America (TECNA), where AZTC president and CEO Steven G. Zylstra serves on its Public Policy Committee. TECNA worked closely with congressional leaders and the Administration to advance these important provisions.
Although the Council did not take a formal stance on the broader bill due to its scope and complexity, we joined TECNA in strongly supporting the R&D provisions included in the final package. In May, the Council issued a Section 174 Action Alert, encouraging members to contact their representatives. Many of the Council’s members acted, and their voices made a difference. Restoring full R&D expensing was also one of the priorities discussed with our state’s federal delegation during our annual DC Fly-In in April.
Why this matters to Arizona’s tech sector:
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The bill restores permanent full expensing for R&D investments under Section 174, reversing the amortization requirement that took effect in 2022.
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It includes retroactive relief for small businesses, allowing companies with annual receipts of $31 million or less to reclaim previously incurred R&D expenses and receive refunds.
These provisions offer long-term certainty and immediate relief to small and mid-sized tech companies—helping preserve jobs, boost innovation, and enhance U.S. global competitiveness.
We applaud Congress for taking this important step forward and thank all Council members who raised their voices in support of this effort.