What’s in Store for Science in Republicans’ Reconciliation Bill

House Republicans are advancing tax breaks for private R&D, large cuts to clean energy programs, and higher taxes on college endowments as part of their budget reconciliation bill for fiscal year 2025. A major spending boost for defense is also included in the bill, as well as plans to restart federal auctions of electromagnetic spectrum bands.

The House passed the “One Big Beautiful Bill” early Thursday in a 215-214 vote after a 42-page manager’s amendment helped to win over several Republican holdouts. Under the reconciliation process, the bill will now proceed to the Senate where it may be passed with a simple majority vote, circumventing the need for Democratic support. Senate Republicans are expected to produce their own version of the legislation.

Any budget changes in the bill will be separate from the annual discretionary budget process.

Tax changes

The House’s bill would reintroduce tax rules allowing companies to fully deduct domestic research costs in the year they occurred, a move that has been endorsed by many companies and universities that partner with them. This provision would reverse a rule introduced in the 2017 Tax Cuts and Jobs Act that requires companies to spread the deduction of R&D costs over five years. (That rule took effect in 2022.)

The bill also would modify the current 1.4% endowment tax on some private colleges and universities’ net investment income to introduce a tiered system of rates, with a top rate of 21% for institutions with endowments exceeding $2 million per student. In addition, the bill would eliminate several tax breaks for non-profit organizations, including an exemption on taxes for non-publicly funded research income. Higher education advocacy groups such as the Association of American Universities have opposed these changes.

Increased military spending

The bill would provide a $150 billion boost to defense spending, of which $24.7 billion is for construction of the “Golden Dome” missile defense shield that President Trump proposed back in January. To support this endeavor, the bill contains $18.8 billion for “next-generation missile defense technologies,” including $7.2 billion for the development and procurement of military space-based sensors, $5.6 billion to develop space-based and phase intercept capabilities, and $250 million for development of directed energy capabilities.

Supporting innovation and enhancing commercial technology for military use are mentioned multiple times throughout the bill. Under a section on enhancing DOD resources for scaling low-cost weapons into production, the bill includes $2 billion for expanding the Defense Innovation Unit, a $1 billion boost for “programs to accelerate the procurement and fielding of innovative technologies,” $250 million for the Defense Advanced Research Projects Agency’s Quantum Benchmarking Initiative , and $120 million for development of small modular nuclear reactors for military use.

The bill also includes $3.2 billion for the National Nuclear Security Administration, of which $1 billion is to accelerate construction of facilities, $540 million is for deferred maintenance, $200 million is for concept studies of new nuclear weapons, and $100 million is to accelerate domestic uranium enrichment.

Big cuts to clean energy

The bill would significantly restrict or eliminate many of the clean energy incentives introduced by President Joe Biden as part of the Inflation Reduction Act, including clean energy tax credits, advanced manufacturing tax credits, Environmental Justice Block Grants, and the Greenhouse Gas Reduction Fund. Multiple Department of Energy offices would see unobligated funding rescinded if the bill passes unaltered, including the Loan Programs Office, the Office of Energy Efficiency and Renewable Energy, and the Office of Policy, among others.

Authorizing spectrum auctions

The bill would restore the Federal Communications Commission’s spectrum auction authority, with the hope of raising $88 billion by 2034 through sales of 600 megahertz of spectrum. At present, the funds would be used to offset the costs of other provisions of the legislation. Democrats’ suggestions to spend the funds on specific federal programs were voted down during committee amendments. Sen. Maria Cantwell (D-WA) has in the past proposed using auction funds to support science programs authorized by the CHIPS and Science Act, but this option no longer appears to be on the table.