Mental Health Research Accelerator Act of 2025

Bill Number

H.R. 2085

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-03-11: Referred to the House Committee on Ways and Means.

Last Updated

2026-02-14T09:06:11Z

AI-Generated Summary

Purpose of the Legislation

The Mental Health Research Accelerator Act of 2025 aims to encourage translational research—research that bridges basic science discoveries to practical medical applications—for neurodegenerative diseases (like Alzheimer's or Parkinson's) and psychiatric conditions (like depression or schizophrenia). It does this by providing a tax credit to offset costs, speeding up development of new treatments, devices, and therapies.

Key Provisions

• Tax Credit Amount: Taxpayers can claim a credit equal to 25% of qualified expenses paid or incurred for eligible translational research during the tax year. This credit is part of the general business credit under Internal Revenue Code (IRC) section 38.
• Eligibility and Allocation:
• Expenses must be for research on neurodegenerative diseases and psychiatric conditions.
• The credit is limited by annual national caps: $1 billion for 2026, $2 billion each year from 2027 to 2030, and $1 billion for 2031.
• The Secretary of the Treasury allocates the available credit among applicants based on scientific merit, with emphasis on projects covering all research phases, new therapeutics or devices for brain and nervous system disorders, drug repurposing (using existing drugs for new uses), and public-private partnerships that share intellectual property.
• Unused portions of the cap carry over to the next year.
• Regulations will be developed in consultation with the Department of Health and Human Services (HHS), Food and Drug Administration (FDA), and National Institutes of Health (NIH) to set application processes and criteria.
• Transfer of Credit: Tax-exempt organizations (e.g., nonprofits under IRC section 501(c)(3) or government entities) can elect to transfer their share of the credit to a taxable "eligible project partner" (e.g., a company funding or participating in the research). This allows tax-exempt groups to benefit indirectly through partners.
• Coordination with Other Tax Rules:
• Expenses used for this credit cannot also be used for the general research and development (R&D) tax credit under IRC section 41 in the same year, but they can factor into base period calculations for future R&D credits.
• No tax deduction is allowed for the portion of expenses equal to the credit amount (to avoid double benefits).
• Termination: The credit ends for tax years beginning after December 31, 2035.
• Effective Date: Applies to expenses after the date of enactment.

Significant Changes to Existing Law

• Adds a new IRC section 45BB specifically for this translational research credit, expanding the list of business credits under section 38(b).
• Modifies IRC section 280C to disallow deductions for expenses claimed under this new credit.
• Introduces allocation mechanisms and transfer rules not previously available for similar R&D incentives, enabling tax-exempt entities to partner more effectively with taxable businesses.
• Unlike the broader R&D credit in section 41 (which covers general qualified research), this targets specific health areas with fixed annual limits and merit-based allocation.

Potential Impacts

• On Government Agencies: The Treasury Department (IRS) will handle applications and allocations, increasing administrative workload. Consultations with HHS, FDA, and NIH could foster better coordination on health research priorities, potentially accelerating federal oversight of new treatments.
• On Citizens: May lead to faster development of therapies for debilitating brain and mental health conditions, benefiting patients and families. However, it reduces federal tax revenue (estimated forgone revenue from credits), which could indirectly affect public funding for other programs.
• On International Relations: Minimal direct impact, though it could enhance U.S. leadership in global health research by attracting international collaborators to U.S.-based projects, especially through public-private partnerships.

Main Stakeholders Affected

• Researchers and Institutions: Universities, nonprofits, and research organizations (tax-exempt entities) gain incentives to pursue targeted studies, with easier partnering options.
• Private Sector: Pharmaceutical companies, biotech firms, and device manufacturers (taxable entities) can claim credits to offset R&D costs, encouraging investment in high-risk neurological and psychiatric projects.
• Government Entities: Federal agencies like Treasury, HHS, FDA, and NIH will influence allocation criteria and regulations; state and local governments (as tax-exempts) could participate in partnerships.
• Patients and Advocacy Groups: Indirectly benefit from potential breakthroughs in treatments for conditions affecting millions, such as dementia or severe mental illness.

Notable Legal, Constitutional, or Political Implications

• Legal: The bill's merit-based allocation and regulatory requirements ensure fairness but could lead to challenges if allocation decisions are seen as arbitrary (e.g., under administrative law standards). Transfer rules promote equity between tax-exempt and taxable entities without violating tax code neutrality.
• Constitutional: No major issues; it uses Congress's taxing and spending powers under Article I to incentivize private research, aligning with precedents for targeted tax credits (e.g., for energy or health).
• Political: Highlights bipartisan interest in mental health (introduced by representatives from both parties), potentially setting a model for future disease-specific incentives. It balances fiscal conservatism (capped amounts and termination date) with public health priorities, but could spark debate over tax expenditures versus direct federal funding for research.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Thompson, Mike [D-CA-4]

Cosponsors (6)

Rep. Kelly, Mike [R-PA-16], Rep. Garamendi, John [D-CA-8], Rep. Thanedar, Shri [D-MI-13], Rep. Salinas, Andrea [D-OR-6], Rep. Carson, André [D-IN-7], Rep. Suozzi, Thomas R. [D-NY-3]

Recent Actions

• 2025-03-11: Referred to the House Committee on Ways and Means.
• 2025-03-11: Introduced in House
• 2025-03-11: Introduced in House

Bill Versions

• Mental Health Research Accelerator Act of 2025 — issued 2025-03-11 — PDF (8 pages)