On Dec. 18, 2015, the President signed into law the “Protecting Americans from Tax Hikes (PATH) Act of 2015”. The PATH Act effectively makes significant changes to the R&D tax credit in its application and availability to business owners. Below you will find these changes, with a brief description and the significance to businesses.
R&D Tax Credit permanence
R&D Tax Credit AMT offset
Previously, qualifying companies could not take advantage of the credit if they were subject to AMT regulation. The R&D tax credit is now available for AMT liability offset thanks to the PATH Act changes.Additionally, as part of the PATH Act, small businesses (defined as non-public companies with less than $50 million in average annual gross receipts for the previous three years) can permanently use research credits generated after January 1, 2016 against both regular tax, and AMT.
R&D Tax Credit payroll tax offset
Now, with the changes introduced in the PATH Act, business owners have the ability to do long-term planning and forecasting to ensure they are taking advantage of the R&D tax credit to its maximum potential.
If you think that you, or your clients, could benefit from the changes made to the R&D credit due to the PATH Act, and would like to learn more about how to benefit from them, please contact Bedford’s R&D tax specialist at Taxcredits@bedfordteam.com