What the FORWARD Act Means for the R&D Tax Credit
There are thousands of reasons to apply for the R&D tax credit—and the FORWARD Act may add a few more. The bill, which was introduced by Senators Chris Coons and Pat Roberts–a move to rescue our Covid-19-devastated economy—makes the R&D tax credit more accessible than it’s ever been. If the FORWARD Act passes, it will open the tax-credit door to even more small- and medium-sized businesses, increase the credit for domestic manufacturers, and—get this—may even cover some of your R&D training costs. Not a bad deal. Now all we need is for Congress to push the bill out of the discussion stage and into action.
Here’s what’s on the table:
- More relief for more businesses: Right now, companies with up to $5 million in gross receipts can use the R&D tax credit to offset their payroll tax for five years. Under the new legislation, however, companies with up to $20 million of gross receipts will be eligible for up to eight years. A huge difference (we did the math).
- Lower training costs for activities. Why should a single company have to cover the cost of training employees for innovations that create jobs and strengthen the U.S. economy? The FORWARD Act expands the R&D tax credit to cover worker training costs, so everybody wins.
- Incentives to manufacture at home. The government has never been so grateful to U.S. manufacturers for creating jobs, strengthening the economy, and lately, responding to urgent Covid-19 needs by producing masks, drugs, and ventilators. The FORWARD Act’s reward? Increasing the dollar amount of their R&D tax credits. After all, they deserve it.
- Benefits for more industries. Software companies, manufacturers, architecture, and engineering firms have always been great candidates for the R&D tax credit. But now, thanks to expansions like the FORWARD Act, even more businesses qualify: Government contractors, banks and stores that develop internal software, and start-ups, chances are good that you qualify now, too. So, looks like there’s only one thing to do: Apply.