Congress Delivers a Gift to Taxpayers

Just before recessing for the holidays, Congress passed legislation that makes the Research and Development (R&D) Tax Credit permanent, and makes the credit available to more taxpayers.

Start-Up R&D Credit Enhancement – Beginning in 2016, qualified small businesses (gross receipts of $5M or less) can use the R&D tax credit to offset payroll taxes of up to $250,000 per year. Prior to this change, companies who paid no income tax, including many innovative start-up companies that were investing heavily in R&D activities, could not benefit from the non-refundable R&D tax credit. This change is a HUGE benefit for many small businesses that need an extra “shot in the arm” to help fund their research and development investments.

AMT Turnoff R&D Credit Enhancement – Also beginning in 2016, eligible small businesses (less than $50M in gross receipts) can use the R&D tax credit to offset their Alternative Minimum Tax (AMT). Previously, the R&D tax credit did not offset AMT, limiting the benefit of the Credit for many innovative businesses. Again, this change will provide the needed incentive to help many of America’s businesses fund research and development efforts and grow their companies.

For further information on the R&D tax credit enhancement, please contact your DHG tax advisor or Adam Quattlebaum at 864.213.5368 or adam.quattlebaum@dhg.com.