News and Insights

Congress Expands and Makes Permanent the Research and Development Tax Credit

Tax Development Dec 21, 2015

On Friday, December 18, 2015, President Barack Obama signed into law the Protecting Americans from Tax Hikes (PATH) Act of 2015. Front and center in this legislation was Congress’s decision to finally make permanent the credit for increasing research activities (R&D Tax Credit).

In addition to making the credit a permanent part of the Internal Revenue Code, additional improvements to the benefit (beginning in 2016) will permit companies averaging less than $50 million in gross receipts for the prior three years to claim any credit generated against Alternative Minimum Tax (AMT) while permitting some start-up companies averaging less than $5 million in gross receipts to apply the credit against, up to $250,000 per year, in payroll taxes.

This is extremely exciting news for companies that design, develop, and/or improve upon products, processes, techniques, formulas, inventions, or computer software as they will be able to recoup a portion of the costs expended to conduct the activities associated with this work.

With the permanency now provided, businesses of all sizes will have the ability to conduct more accurate yearly tax planning, feel confident making expenditures that seek to improve upon their ability to compete in the marketplace, and can rest assured that Congress and the President fully support their efforts to invest in the technological advancement of our economy.


Allea Newbold

Michael A. Thompson