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On December 18th, President Obama signed into law the groundbreaking Protecting American from Tax Hikes (“PATH”) Act of 2015. Notably, this legislation dramatically improves the R&D Tax Credit. In fact, while the focus has been on Congress making the R&D Tax Credit permanent, the more substantive changes come from two new options for taxpayers to utilize the credit. To detail, below is a summary of the changes made to the R&D Tax Credit:

  • Permanently extends the R&D Tax Credit;
  • Allows for eligible small businesses ($50 million or less in gross receipts) to claim the credit against alternative minimum tax (“AMT”) for tax years beginning after December 31, 2015; and,
  • Allows eligible startup companies (those with less than $5 million in gross receipts and earning revenue for less than 5 years) to claim up to $250,000 of the credit against the company’s federal payroll tax for tax years beginning after December 31, 2015.

Accordingly, taxpayers that could not utilize or take full advantage of the R&D tax credit in the past should now reassess their eligibility to maximize this lucrative incentive. For more information and assistance, please contact Betsi Barrett or call 770.396.2200 to schedule a consultation.