Today, December 18, 2015, the Senate passed the “Protecting Americans from Tax Hikes Act of 2015”. This bill was merged with the massive $1.1 trillion year-end spending measure. Now, the package will be sent to President Obama for final signature. The bill makes a number of tax breaks permanent and ends the cycle of annual, temporary tax provisions for businesses (job creators) and individuals. After almost 35 years of temporary status, the R&D tax credit will no longer face the uncertainty of renewal with it being made permanent. The credit will help the U.S economy in multiple areas by allowing businesses to make long term R&D investments, create jobs and encourage innovation and growth. It will also increase competitiveness and help prevent the U.S. from falling further behind other countries in R&D tax incentives, as the U.S. R&D ranking has been steadily falling over the last few years.
In addition to making the R&D tax credit permanent, the bill provides extra incentives for small, eligible businesses. For these taxpayers, the credit can be utilized against alternative minimum tax and payroll tax liabilities, which was previously not allowed.
It is anticipated that the bill will be signed into law sometime next week. If this occurs, taxpayers will have an additional package under the Christmas tree.
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