This bill would change the way that tax credit rates are calculated for
research and development (R&D) expenses by creating a permanent formula. Think of these as the tax breaks companies would get for spending time and resources on innovations that the U.S. can take credit for.
Business tax credits would be extended to 20 percent tax credit (from the current 14 percent tax) for research and development expenses — equaling:
- 20 percent of qualified research expenses for the taxable year that
exceeds 50 percent of the average qualified research expenses for the
three preceding tax years;
- 20 percent of basic research payments for
the taxable year that exceed 50 percent of average research payments for
the three preceding tax years;
- 20 percent of all expenses
(without regard to a base amount) paid to an energy-research consortium
for research conducted for the taxpayer.
Currently this tax credit has to be renewed by Congress — and has been 15 times since its inception in 1981. The latest extension on this tax credit is good through 2015. The bill backdates such a change to the three preceding taxable years.