R&D Tax Credit – Progress on Permanent Research Credit – House Bill Passes

In an overwhelming vote of 271 to 131, the House of Representatives passed a bill making the R&D tax credit permanent, rather than continuing to extend the R&D credit for 2 year periods which has been the norm for many years. Interestingly, the bill did not augment (or eliminate) the 1980s base period rules requiring many companies to locate records from the 1980s to establish the base period under the regular R&D credit calculation.

As to the Senate, this permanent R&D credit likely will have challenges in the Senate, and even at the President’s level, who despite his strong support for the R&D credit, believes a permanent credit should be funded from cutting back or eliminating other tax programs as part of a larger tax reform effort. 

The Senate is expected to introduce its own 2 year extender bill next week to extend the R&D credit for 2 years. Nevertheless, there has been good progress in this election year on getting some form of R&D credit bill passed prior to year’s end and possibly even before the elections. 

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