Posted by Jeffrey M. Feingold on 07.05.17
Tax reform is in the air. While we don’t yet know how it will play out, business owners should take note of the bipartisan support for an incentive to increase the productivity of U.S. companies in a wide range of industries—the research and development (R&D) tax credit.
In our recent blog, Senate Bill Would Increase Tax Credits for U.S.-Based R&D, we detailed how a pending bipartisan bill would enhance the value of the R&D credit by up to 25 percent for companies that perform the majority of their manufacturing in the U.S. That bill is now being considered by the Senate Finance Committee.
Why is this important? Set against a backdrop of great partisan discord, there remains a strong bipartisan commitment to helping businesses improve their processes and products. When Congress made the R&D tax credit permanent as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015, it set the stage for encouraging businesses of all sizes to examine whether their activities could qualify for major cash-savings opportunities.
Yet, less than one-third of companies that qualify for the federal R&D tax credit actually utilize it. I urge business owners to examine whether the activities you already engage in are eligible for R&D tax credits. You can start by viewing our short video that explains the IRS’ four-part test that determines R&D tax credit eligibility.
In addition to the bill the Senate recently approved, another bipartisan measure has been introduced in the House to simplify and enhance the R&D credit. The bill would make it possible for new businesses to take a credit equal to 10 percent – up from six percent – of the taxpayer’s qualified research expenses. It also eases the way for small and midsize businesses that are applying for the R&D credit for the first time.
Tax Point Advisors will continue to monitor political and legislative changes and keep you updated through our blogs and newsletters.
Please visit our website blog page where you can search our blogs for information by industry or subject matter. You are also welcome to call me personally at (800) 260-4138 to initiate a discussion about your business’ potential to save tens of thousands of dollars by taking advantage of the R&D tax credit.
Find Out if Your Activities Qualify
The R&D tax credit can be a lucrative incentive for your business. Given the new permanent nature of the federal tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities. Download our free e-book: The Business Owner's Guide to R&D Tax Credits.
Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, call us at 800-260-4138 or please leave us a message below.