The Research Tax Credit Gets a Positive Boost
Last week, on April 3, Senate Finance Committee Chairman Ron Wyden (D-OR) and the Finance Committee passed a bipartisan bill renewing the popular research tax credit as well as 50 other tax provisions known as the “tax extenders”. The bill entitled the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act was approved by a near unanimous bipartisan vote. If approved by Congress, the research credit would be extended through December 31, 2015.
The EXPIRE Act, which still needs to work its way through both houses of Congress before it can be put on the President’s desk for signature, still has a few hurdles to overcome – House and Senate partisanship in particular. Nevertheless, this is an important first step. Political analysts suggest the bill will get a pass in both chambers of Congress later this year, likely following the November elections.
As for the R&D tax credit, I should point out that there are two important changes that will certainly have a positive impact on small manufacturing businesses.
- For S-corps and LLC’s, the R&D tax credit will be allowed to offset shareholder’s AMT for 2014 and 2015.
- “Startup” companies will be allowed to take a credit of up to $250,000 against the payroll taxes relating to the amounts paid on its employee wages. Note: This benefit would only be available for companies that have existed for less than five years and that have less than $5-million dollars in annual gross receipts.