H.R. 4438 would change the way that tax credit rates are calculated for
research and development (R&D) expenses by establishing a permanent formula.
Business tax credits would be extend to 20 percent tax credit (from the current 14 percent tax) for research and development expenses — equaling to the sum of:
- 20 percent of qualified research expenses for the taxable year that
exceeds 50 percent of the average qualified research expenses for the
three preceding tax years;
- 20 percent of basic research payments for
the taxable year that exceed 50 percent of average research payments for
the three preceding tax years;
- 20 percent of all expenses
(without regard to a base amount) paid to an energy-research consortium
for research conducted for the taxpayer.
Currently this tax credit has to be renewed by Congress — and has been 15 times since its inception in 1981. Senate has already passed a 2-year extension on this same tax credit, good through 2015. The bill backdates such a change to the three preceding taxable years.