Congress May Extend and Modify R&D Tax Credit

The Senate Finance Committee recently issued a news release that proposes to extend and modify the R&D tax credit. The summary is as follows:

Research and Development Credit. The law provides a research tax credit equal to 20 percent of the amount by which a taxpayer’s qualified research expenses for a taxable year exceed its base amount for that year. The provision expired 12/31/07. The proposal would extend current law to the end of 2009, with the following changes: 1) repeal the alternative incremental research credit in 2008; 2) increase the alternative simplified credit to 14% for 2008, and 3) increase the alternative simplified credit to 16% for 2009.