Written by Chris Blaylock, CPA and Partner - Wipfli LLC
Take Advantage of Opportunities for R&D Credit
First enacted in 1981, the Research & Development (R&D) Tax Credit is one of the most valuable tax credits available to businesses today. While in the past, the R&D credit had expired eight times and was extended 15 times, it was finally made permanent in the PATH Act of 2015. Its permanent status makes planning much more feasible for companies intending to apply for it.
And apply they do. In fact, U.S. companies claim $7.5 billion in R&D credits annually. While many large manufacturing and distribution companies have taken advantage of the credit for years, smaller and midsize companies can also qualify.
The result? Big tax savings: a 20 percent credit for qualified research expenses exceeding a base period based on gross receipts and qualified expenditures, or a 14 percent alternative simplified credit if certain base levels of R&D expenses are exceeded.