At ROLINC, we’re always excited to bring valuable insights to our clients, particularly when it comes to topics that directly impact the industries we serve. You may have caught a recent “ROLINC Recruiting Roundup” video series with recruiting and hiring trends, but last week we brought an outside expert to speak to something all businesses are impacted by – tax policy. In this fireside chat, our host and Director of Marketing Jasmine Weber sat down with Alex Bray, a partner at Aldrich Advisors in Denver, to explore critical tax policies impacting businesses today.
More on our guest, Alex Bray:
Alex brings over a decade of public accounting experience, specializing in research and development (R&D) tax credits and their implications for industries like manufacturing and construction. With an impressive background—holding a Juris Doctor, MBA, a Master of Laws in Taxation, and working on a Master of Engineering—Alex has vast knowledge of both tax consulting and accounting. Here’s what we learned from our chat with him.
R&D Tax Credits: What It Is and Why It Matters
Alex kicked things off by diving into the R&D tax credit, one of the most powerful but underutilized tools for U.S. businesses. “The R&D credit is meant to incentivize domestic innovation,” Alex explained, highlighting how the credit supports companies that are pushing the boundaries in technology, engineering, and hard sciences. Governed by IRC Section 41, this credit has been around for over 40 years and rewards taxpayers for investing in research, which, in turn, stimulates innovation and strengthens the U.S. economy.
However, despite its long-standing benefits, the R&D credit is often underused due to a lack of awareness and changes in policy that have complicated its application.
Policy Shifts Under the Tax Cuts and Jobs Act
A critical point Alex made was how the Tax Cuts and Jobs Act (TCJA) of 2017 upended the traditional treatment of R&D expenses. Historically, businesses had the flexibility to deduct or amortize these expenses over time, but starting in 2022, new rules mandated that R&D expenses be amortized over five years rather than deducted upfront.
This change, governed by IRC Section 174, has caused major challenges for businesses, especially in construction and manufacturing, where innovation is key. “This has thrown a huge ripple across these industries,” Alex noted, explaining how amortization disrupts cash flow for companies that rely on R&D activities.
The Ongoing Legislative Battle
Many businesses were caught off guard by this shift, and even though professionals like Alex and his team at Aldrich worked hard to educate clients in advance, the change has still created financial headaches. Alex emphasized that this is a problem many hoped would be a “quick fix,” but unfortunately, legislative processes have slowed down any real progress.
Despite efforts, a recent bill that aimed to repeal the amortization requirement passed the House but failed in the Senate. As Alex explained, election cycles further complicate the ability to get such legislation passed.
“We’re continuing to engage with legislators, but it’s a slow process,” Alex said. He’s optimistic, though, that with major tax policies set to expire in 2025, there will be an opportunity to revisit the issue and hopefully secure a win for businesses in the next round of legislation.
What Can Businesses Do?
So, what can businesses do in the meantime? Alex had a clear message: get involved. He encourages business leaders to reach out to their legislators and explain how these tax policies are affecting day-to-day operations. “Bad tax policy shouldn’t be what puts someone out of business,” he pointed out, urging companies to voice their concerns and advocate for change.
For those who want to stay proactive, engaging with professionals like Alex or organizations like the American Council of Engineering Companies (ACEC) and Associated General Contractors (AGC) can provide more support in pushing for legislative fixes.
Looking Ahead
While the challenges presented by current tax policy are real, Alex left us with some optimism. “2025 is going to be a significant year for tax legislation,” he shared, noting that many of the current TCJA policies are set to sunset. He’s hopeful that this window of opportunity will lead to favorable changes for businesses.
At ROLINC, we aim to support our clients beyond staffing needs, offering insights that can help them thrive in today’s complex business landscape. The conversation with Alex Bray highlighted just how important it is to stay informed and engaged with tax policies that directly impact our industries.
If you have questions about how these tax changes might affect your business or want to connect with industry experts like Alex, don’t hesitate to reach out. We’re here to help navigate these challenges and advocate for solutions that benefit your business.
Watch the full fireside chat conversation:
Learn more about Aldrich here.
Want to connect with ROLINC or Aldrich? Contact us today.
Thank you to Alex Bray for joining us for this insightful Fireside Chat. Stay tuned for more industry expert discussions, and as always, let us know what topics you’d like to see covered next!