U.S. Rep. Jackie Walorski (R-IN) on July 23 introduced legislation that would increase the research and development (R&D) tax credit and provide better access to it for business startups.
“This commonsense measure will go a long way toward keeping America ahead of our global competitors and ensuring we continue to lead the world in scientific discoveries, technological breakthroughs, and cutting-edge manufacturing,” said the congresswoman last week.
Rep. Walorski sponsored H.R. 7766 with cosponsor U.S. Rep. Jodey Arrington (R-TX) to double the rate for each of the options businesses have to access to the R&D tax credit, according to a bill summary provided by her office.
Specifically, the legislation would double the existing traditional credit rate from 20 percent to 40 percent of the increase in R&D spending for more established companies, and would double the existing alternative simplified credit rate from 14 percent to 28 percent of the increase in R&D spending, according to the summary.
For companies with no history of U.S. research in the past three years, the credit would more than double from 6 percent to 14 percent of R&D spending, and companies with relatively low income in the past five years could take one of the above credits as a credit against Social Security payroll taxes, with the limit on the amount they could claim doubling from $250,000 to $500,000, the bill summary says.
“America’s recovery from the unprecedented crisis we are facing will be driven by our innovative and entrepreneurial spirit,” Rep. Walorski said. “Doubling the R&D tax credit will encourage companies — especially small businesses and startups — to invest more in research and development that will unleash economic growth and prosperity.”
H.R. 7766 is supported by the National Association of Manufacturers.
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