House Approves Permanent R&D Credit

The House voted 274 to 145 on May 20 to modify and permanently extend the R&D tax credit. The legislation (H.R. 880) would repeal the traditional R&D credit but would make the alternative simplified credit (ASC) permanent and increase the rate from 14% to 20%. H.R. 880 would also make permanent the basic research and the energy research credits at a 20% rate, and would allow private companies with less than $50 million in annual gross receipts to take the R&D credit against alternative minimum tax.

The lopsided vote showcases the strong bipartisan support for the credit, but the Senate is not expected to take up H.R. 880 on its own. The R&D credit expired with more than 50 other popular tax provisions at the end of 2014, and Congress will likely address all of these provisions as part of a single larger package.