R&D Tax Credit: Payroll Tax Offset Doubled!
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!
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