Congress Acts on Long-Time TIA Priority for Permanent R&D Tax Credit
Congress has acted on a long-time TIA priority by finally making the Research and Development (R&D) Tax Credit permanent. Until now, the effectiveness of the credit has been significantly impaired by its temporary status, which largely restricts its use to short-term research projects. That has been particularly harmful for basic research and for Information and Communication Technology (ICT) research generally, which is often long-term by nature. Making the credit permanent will provide companies with certainty and allow them to make greater investments in cutting-edge technologies, including new spectrum sharing and millimeter-wave technologies to support the emerging Internet of Things. This is a major win for the economy and the ICT industry.
Importantly, the legislation passed by Congress also expands the credit by allowing it to be claimed by small businesses against the alternative minimum tax (AMT). And very small businesses with income less than $5 million will be allowed to claim the credit against their payroll taxes for up to five years.
Both of these provisions will make the credit enormously helpful to small ICT startup companies going through an early growth phase with little income tax liability, helping to broaden and deepen the U.S. innovation economy. These proposals originated as the Startup Innovation Credit Act and the Innovators Job Creation Act, and TIA appreciates the patient work of Senators Coons, Enzi, Schumer, Roberts, Rubio and others over several years to help make these changes a reality.
TIA commends Congress for taking this important step to ensure that the United States continues to foster innovation in the ICT sector, helping to maintain its leadership in the increasingly competitive global economy. Moving forward, TIA will continue to advocate for additional legislative actions to further promote fundamental research and boost R&D support to match other major economies around the world.