Last night, the House voted 274-145 in favor of a bill that would permanently extend and expand the federal Research and Development (R&D) Tax Credit. The bill now advances to the Senate, and it is unclear if and when the Senate will consider the House bill at this time. If the bill were to pass the Senate and be sent to the President for signature, the bill would end the 35-year cycle of temporarily extending the credit, creating much needed permanency and stability in the tax code for small businesses.
However, President Obama has threatened to veto the House bill if were to reach his desk, citing concerns that the cost of extending the tax break would not be offset in the federal budget. alliantgroup National Managing Director and former Senior Counsel to the U.S. Senate Finance Committee, Dean Zerbe, offered his praise and support for the bill, but cautioned its prospects of actually becoming law.
“The good news is the House passed an R&D tax bill with changes in the law as to AMT that will make it much easier for thousands of small and medium businesses to take full advantage of the R&D Tax Credit,” said Dean Zerbe, alliantgroup National Managing Director and former Senior Counsel to the U.S. Senate Finance Committee. “The bad news is with the administration’s threat of veto, this important legislation to encourage innovation and productivity will not be made permanent law. Businesses have gotten used to the start-stop of extenders and I suspect they will rightly focus on the positive news of a more robust R&D Tax Credit that is friendly to small and medium businesses and let tomorrow take care of tomorrow.”
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