U.S. Rep. Jackie Walorski (R-Ind.), a senior member of the House Ways and Means Committee, this week introduced H.R. 8253, the Fostering Innovation and Research to Strengthen Tomorrow (FIRST) Act, which would double the research and development (R&D) tax credit and allow more small business startups to access this credit.
“The American people’s innovative and entrepreneurial spirit drives our nation’s success,” said Congresswoman Walorski. “Doubling the R&D tax credit will encourage American companies – especially small businesses and startups – to invest in innovation that will unleash economic growth and prosperity. The FIRST Act will take a strategic step toward ensuring that America will lead the world in scientific discoveries, technological breakthroughs, and cutting-edge manufacturing for the 21st century.”
“This bill is crucial to making America the world leader in innovation. With greater support for research and development, the U.S. can develop more cures, return drug manufacturing to the United States, and achieve medical independence. I want to thank Rep. Walorski for her leadership on this bill,” said Ways and Means GOP Leader Kevin Brady (R-Texas).
Congresswoman Walorski’s legislation has garnered the support of the National Association of Manufacturers (NAM).
“The manufacturing industry is the backbone of American research and development and this bill would support jobs, boost innovation and help ensure America’s future competitiveness,” added David Eiselberg, Senior Director of Tax Policy, NAM.
To foster innovation, FIRST Act would double the rate for each of the options businesses have to access the research and development (R&D) tax credit. Specifically, it would:
- Double the “Traditional” Credit to 40 Percent: For more established companies, the existing traditional credit rate – which uses a complicated formula – would double from 20 percent to 40 percent of the increase in R&D spending.
- Double the Alternative Simplified Credit (ASC) to 28 Percent: The existing ASC rate – which uses a simpler formula – would double from 14 percent to 28 percent of the increase in R&D spending.
- More than Double the Credit for Firms with Little Research History to 14 Percent: For companies with no history of U.S. research in the past three years, the credit would more than double from 6 percent to 14 percent of R&D spending. (The current rate would have been 7 percent if not for a prior drafting error.)
- Double the Startup Limit to $500,000: Companies with relatively low income in the past five years can take one of the above credits as a credit against Social Security payroll taxes. The limit on the amount they may claim would double from $250,000 to $500,000.
The full text of the FIRST Act is available here.
Article provided by Representative Walorski’s office