Research Tax Credit Made Permanent

The recently enacted Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended a wide variety of tax breaks, in some cases making them permanent.  One of the breaks that was made permanent was the research credit, also known as the “research and development” or “research and experimentation” credit.  This credit has been in existence for many years, though it would expire and then be renewed by Congress.  This time around, the renewal has made this valuable credit a permanent part of the tax law.

The credit rewards businesses that increase their investments in research. The credit, generally equal to a portion of qualified research expenses, is complicated to calculate, but the tax savings can be substantial.

Prior to this most recent renewal the credit could only offset regular tax liabilities, but not below AMT.  In addition to the renewal, the credit may also now offset AMT for certain small businesses.

If you believe your business is conducting qualified research and you are not taking this credit, please give us a call so that we can discuss the credit, its requirements, and your potential tax savings with you.

Wertz & Company, LLP, is an Irvine Tax Accounting and Professional Services Firm located in Orange County, CA that specializes in working with entrepreneurs along their journey to success.