R&D Credit Payroll Tax Offset May Offer More Immediate Cash Tax Benefit
If you’re a qualified small business that devotes resources to making products, processes, or software better, faster, cheaper, or more sustainable, you may benefit from R&D tax credits even if you have no income tax liability. Startup taxpayers, in certain circumstances, may offset up to $500,000 of their FICA federal payroll tax liability — for up to 5 years — using R&D credits. The 2022 Inflation Reduction Act doubled this, bringing the previous limit of $250,000 to the current $500,000. Companies across a variety of industries can benefit from the credit.
Businesses founded in the past five years and with less than $5 million in revenue may be eligible. Qualifying research activities don’t need to be flashy or revolutionary, or even succeed.
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