Late last week, Congress negotiated the annual “tax extenders” package which extends a number of tax credits for businesses and families for the 2015 tax year – including the research and development tax credit. The final bill extended the federal R&D Tax Credit indefinitely, instead of the one year extension that has been passed in years past. This bill was signed by President Obama on Friday.
What This Means:
Florida’s R&D Tax Credit is tied to the federal R&D Tax Credit, meaning in years the federal R&D Tax Credit lapsed, companies in Florida performing qualified R&D would not receive the Florida credit either. Making the federal R&D Tax Credit permanent creates predictability for companies performing research and allows companies to qualify for a single set of standards – both at the federal and state level – to receive tax credits for research and development.
The Florida Chamber of Commerce encouraged reforms to Florida’s R&D Tax Credit earlier this year, and lawmakers passed them during the 2015 Legislative Special Session A. The amount available for tax credits for the 2015 tax year is $23 million, with a weeklong application period opening on March 20, 2016. If the amount in tax credits applied for exceeds the $23 million cap, tax credits will be allocated on a prorated basis. After this year, Florida’s R&D Tax Credit will be capped at $9 million, unless legislative action again increases the cap. The Florida Chamber testified last month before the Florida House Finance & Tax Committee about the need to support future innovation by permanently increasing the R&D Tax Credit cap from $9 million to $23 million.