December 12, 2015 – Good news is on the horizon for the R&D Tax Credit and several other tax provisions. As we are approaching the end of the year, there has been some movement on the extension of the R&D Tax Credit as well as some other beneficial tax provisions. For once, there is not only a Plan A, which is a major tax package, but there is also a backup plan to ensure the credit is extended.
The tax package is still in heavy negotiations in order to complete more robust changes and at the center of this package there is a provision to indefinitely extend the research and development tax credit as well as the Section 179 deduction. Congress is trying to complete the package before they are scheduled to leave town for the remainder of the year on December 11. The reasons for the holdup include the size of the package, whether the child care tax credit should be indexed for inflation, and whether the bill will include a delay of the “Cadillac” tax, which is a component of the Affordable Care Act that is levied on only the most expensive employer-sponsored health insurance plans.
However, House Ways and Means Committee Chairman Kevin Brady turned up the pressure to complete the tax package by drafting a fallback bill, which would extend approximately 50 provisions for two years. For the research and development credit, this would make the credit extend back to cover 2015 as well as go forward to 2016. Additionally, the bill includes a provision for removing the AMT barrier for the credit, which would be beneficial for small businesses, as well as increasing the credit amount overall. The most exciting part of the bill is that it also changes the calculation for the Alternative Simplified Credit from a tax credit rate of 14% to a 20% one.
SAMANTHA TABER, is a RTC MANAGER at Braithwaite Global Inc., Samantha earned her J.D. from Texas Tech University School of Law and has three years of experience helping companies take advantage of the Research and Development Tax Credit. During that time, she has assisted over 200 clients ranging from small to medium size companies to large publicly held companies. Located in Houston, Texas, Samantha assists in managing the production team and provides our clients with advisory and project implementation services.