The Next Relief Bill — Congress Eyes R&D Tax Credit

forbes logo

Dean Zerbe | Forbes Contributor

Congress is sharpening its pencils as to the next round of legislation seeking to address the problems facing the nation due to the continuing impact of Covid-19. High on the list — as a means to encourage economic growth — is expanding the R&D tax credit. Time for business owners to make sure they are taking a hard look at whether they qualify for this key business incentive.

R&D Tax Credit Proposals

Proposals for using the R&D tax credit as a tool to help move the economy include: doubling the R&D tax credit; allowing businesses to monetize their R&D tax credit immediately (and other business credits) – as opposed to carrying the credit forward; expanding the R&D tax credit for domestic manufacturing; and increasing the refundable R&D credit for startups (the last two — both key parts of the bipartisan Forward Act by Senators Coons (D-DE) and Roberts (R-KS).  The R&D tax credit is seen by many policy makers as an effective tool to address concerns about offshoring – especially as to pharmaceutical and medical equipment — as well as strengthening our nation’s manufacturing base.

Next Relief Bill

 I expect that these proposals on expanding/strengthening the R&D tax credit will be part of the discussion in the next Covid-19 relief bill – which will be considered prior to the August recess. On the tax side, there is also discussion of having an expanded employee retention credit (with a much higher dollar threshold then currently in place) and the administration has an interest in a payroll tax holiday for both employees and employers. Finally, as to taxes – Congress will consider whether they want to have the Treasury/IRS issue another round of checks to families/individuals – I think the wind is blowing in support of that currently.

Congress is struggling with the $600 add-on weekly payment for unemployment that expires at the end of July. In general, most Republicans want to encourage people to return to work (and incentivize/bonus those who do); and most Democrats want to retain the $600 supplemental unemployment payment. The expiration of the $600 is certainly placing a focus on Congress to pass something as a Covid-19 relief package before the August recess.