A federal research and development tax break may be on the way back for U.S. manufacturers, if politicians can compromise on a tax deal in Washington.
The tax credits had been an aid for businesses to invest in new equipment but have since expired.
As a result, some companies had cut back on capital expenditures. Omar Nashashabi, a partner at nonpartisan lobbying firm The Franklin Partnership, told members of the Manufacturers Association for Plastics Processors late last year that a recent survey by his firm showed that 62 percent of machine shops cut capex in 2023 following the loss of the credit.
But new talks in Congress would link the R&D credit with other spending — on a child tax credit — to make the tax break more palatable for everyone.
"You will not get a fix on R&D reinstatement unless Democrats get the child tax credit expansion or some level of expansion back into play," Nashashabi said. "These are handcuffed together in an election year."