The Tax Cuts and Jobs Act of 2017 secures the R&D credit; Creates new favorable provisions

There’s more great news for the Research & Development Tax Credit.

On Dec. 20, 2017, Congress voted and passed the Tax Cuts and Jobs Act of 2017 (TCJA).  The bill is now in the Presidents hands for him to sign into law.

This monumental tax reform act, which reduces tax rates and modifies and in many cases simplifies existing policies for both individuals and businesses, will also preserve the Research and Development (R&D) tax credit, while creating further opportunities for U.S. businesses to benefit from the incentive.

In recent years the R&D credit, which works to help millions of innovative U.S. companies stay globally competitive, has received widespread bipartisan support.   (In fact, the TCJA vote comes only two years and two days after the R&D credit was signed into law through the passage of The Protecting Americans From Tax Hikes Act of 2015, (PATH Act).  As such, there was little concern that under the new tax plan it would be repealed. However, there was concern that language within the proposed tax reform legislation could create unintentional hurdles for businesses looking to claim it. Fortunately, the final legislation eliminated many of these hurdles, especially in the area of Alternative Minimum Tax (AMT) for corporations.

Due to the elimination of so many credits and deductions, businesses and tax preparers alike are sure to look toward the R&D credit as a new tax planning strategy.

Over the coming weeks, we here at Tax Credits Group will be sure to share information on how the new tax reform plan will impact the R&D credit, and what the businesses looking to claim it need to know.

To stay up to date on the latest R&D news, be sure to subscribe to our R&D Blog.

Michael Krajcer is President of Tax Credits Group. He has specialized in the R&D Tax Credit since he started with IRS in 1986 and was the Cleveland large case technical specialist on the issue.  Subsequent to his government career, he continued as an expert in the credit area in Big-4 accounting, industry, and with his own national practice. Mike has worked with hundreds of companies throughout the United States and has resolved dozens of IRS and state audits of credit claims.

 

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