Delaware Governor Jack Markell signed the Delaware Commitment to Innovation Act (S.B. 200) on March 17, 2016. The Act includes provisions that would enhance the state’s economic development toolkit.
Intent on ensuring that Delaware remains one of the friendliest states in the union for business incorporation and facility location, a bipartisan contingent of Delaware lawmakers recently introduced legislation that would revolutionize the availability of, and accessibility to, the state’s research and development tax credit benefit as well update the New Economy Jobs Tax Credit.
Key highlights of the Act include:
Research and Development Tax Credit (R&D)
The legislation seeks to eliminate the $5 million expenditures cap imposed on taxpayers by prior law and makes the credit completely refundable. Both of these changes to the existing credit structure will help business on either end of the financial spectrum. The removal of the expenditures cap will help very large companies receive the full benefit of the research-related expenditures incurred, while the refundable nature of the R&D credit will especially help smaller start-up companies. The application process for the R&D credit has also been removed.
New Economy Jobs Program Credit
The Commitment to Innovation Act makes modifications to the New Economy Jobs Tax Credit by reinstating it and providing for a tax credit calculated based on the value of total income tax withholding payments to the state. It also provides provisions for a credit for retained jobs for companies involved in corporate restructuring.
As noted in Governor Markell’s press release on March 3, 2016: “The Commitment to Innovation Act is an important part of the state’s proposal to DuPont to locate the headquarters of both its agricultural company spin-off and its specialty products spin-off following its expected merger with Dow.”
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