Bill Doubles the Research and Development Tax Credit for Startups
Bipartisan legislation introduced by Senators Thom Tillis (R-NC) and Maggie Hassan (D-NH) to expand the refundable research and development (R&D) tax credit for startups and small businesses has gained support among entrepreneurship and innovation leaders. The R&D tax credit supports the efforts of businesses to invest in the development of new, innovative products that lead to job creation and a stronger economy.
"Research and development plays a crucial role in allowing small businesses in North Carolina and across the country grow and create jobs," Senator Tillis said. "This bipartisan legislation will expand the R&D tax credit so American innovation can continue to thrive and compete globally."
See below for statements of support from key entrepreneurship and innovation leaders:
- Center for American Entrepreneurship: "In many aspects of current public policy - tax laws, regulation, access to capital - America's most innovative young businesses have the competitive deck stacked against them. By expanding startups' access to the R&D tax credit, this bill helps address an obstacle that has undermined America's innovative capacity and economic growth. The Center for American Entrepreneurship is grateful to Senators Maggie Hassan and Thom Tillis for their leadership and commitment to strengthening American entrepreneurship."
- National Venture Capital Association: "At a time when the global race to lead the next generation of emerging technologies has never been closer, we are thrilled to see the introduction of this bill which will support the efforts of the innovative startups whose success will determine American success in this competition. We thank Senators Hassan and Tillis for their leadership, and look forward to working with Congress to enact this legislation to encourage new company formation and growth."
- Angel Capital Association: "As the voice of over 14,000 members of angel groups, individual investors and family offices, the Angel Capital Association applauds Senators Maggie Hassan and Thom Tillis on expanding the R&D tax credit to be used to offset payroll tax for early stage companies. Senator Hassan and Tillis understand the challenges facing entrepreneurs and those who invest in startup companies. All too often our tax policy is skewed toward established dividend paying companies, leaving early stage entrepreneurs at a distinct disadvantage. This legislation expands on the smart policy of allowing pre-revenue companies to off-set their payroll tax by leveraging the R&D tax credit. The Hassan-Tillis legislation is a shot in the arm for the next generation of American high growth companies."
- Information Technology & Innovation Foundation: "The Hassan-Tillis bill represents an important extension of the research and development tax credit. We know the credit generates at least one dollar in extra research for every dollar of revenue lost. That research in turn generates $2-3 dollars in social value, making society better off. Unfortunately, small startups are often unable to take full advantage of the credit. This bill takes an important step in that direction."
The bipartisan Research and Development Tax Credit Expansion Act
would expand the R&D tax credit for new and small businesses by doubling the refundability of the credit from $250,000 to $500,000, extending the credit to all small businesses with less than $10 million in annual revenue, and expanding how the refundable credit is claimed against payroll taxes. The legislation also strengthens incentives for startups to increase R&D investment and removes barriers that limit startups' ability to claim the credit.
Read the one-pager on the R&D Tax Credit Expansion Act HERE. Read the section-by-section on the bill HERE.
- Contact: Daniel Keylin