History of the R&D Tax Credit
The research tax credit has had a colorful history.
The research tax credit was first enacted in 1981 in response to a perceived slow down in U.S. research and a loss of economic competitiveness. It is hoped that the incentive would foster technological innovation in the United States, maintain United States research capabilities, and create and retain jobs in the United States.
The research tax credit has been very popular with taxpayers and politicians. Indeed, the research tax credit has consistently received high praise from industry groups and bipartisan support from politicians. Despite its popularity, the research tax credit was not initially a permanent part of our tax laws. The research tax credit was enacted for specific periods of time, extended for short one or two year periods, had expired, and had been re-enacted numerous times. This temporary feature was fixed and now the credit is permanent.
Even though the credit is now permanent, the law for the research tax credit is anything but static. Congress continues to make changes to the credit and there are always new court cases and rulings that address different aspects of the credit. This evolving body of law and interpretation of the law is the subject of this very website.
Last Updated: 8/11/2017