R&D Tax Credit: Payroll Tax Offset Doubled!

  • Technology
  • 9/8/2022

As you may know the IRS tax law provides for an R&D tax credit for qualifying research activities. While this credit is normally limited to offsetting federal in...

As you may know the IRS tax law provides for an R&D tax credit for qualifying research activities. While this credit is normally limited to offsetting federal income tax, Congress passed a law that would allow startup companies to make an election to use the credit to offset the employer portion of payroll taxes. This is a huge benefit for early stage technology companies, as these companies often run in Net Operating Loss position during the early years. For a deeper dive on the credit itself check out this video here!

The current law allows for an R&D tax credit to offset up to $250,000 of the employer portion of payroll taxes. The Inflation Reduction Act of 2022 which was recently passed by congress and signed into law doubled that amount to $500,000!

This is a great opportunity that technology startup companies should be taking advantage of!

Get more information here

This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.

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