Title: To amend the Internal Revenue Code of 1986 to increase the research tax credit and provide better access to the credit for business startups.
Policy area: Taxation

Summary:
This bill increases from 20% to 40% the rate of the tax credit for increasing research activities. It also increases the rate of the alternative simplified research credit and the credit rate where there have been no research expenses for the preceding three years.
The bill also increases the amount of research expenses for purposes of calculating the payroll tax credit allowed to certain small businesses.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7766 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 7766

To amend the Internal Revenue Code of 1986 to increase the research tax 
 credit and provide better access to the credit for business startups.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 23, 2020

Mrs. Walorski (for herself and Mr. Arrington) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to increase the research tax 
 credit and provide better access to the credit for business startups.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. INCREASE IN RESEARCH CREDIT AND BETTER ACCESS TO CREDIT FOR 
              STARTUPS.

    (a) Credit Rate Increase.--
            (1) In general.--Section 41(a) of the Internal Revenue Code 
        of 1986 is amended by striking ``20 percent'' and inserting 
        ``40 percent''.
            (2) Alternative simplified credit.--Section 41(c)(4)(A) of 
        such Code is amended by striking ``14 percent'' and inserting 
        ``28 percent''.
            (3) Credit rate in case of no research expenses in 3 
        preceding years.--Section 41(c)(4)(B)(ii) of such Code is 
        amended by striking ``6 percent'' and inserting ``\1/2\ the 
        credit percentage in effect under subparagraph (A)''.
    (b) Modification of Small Business Portion Allowed Against Payroll 
Tax.--
            (1) Increase in limitation.--Paragraphs (4)(B)(i) and 
        (5)(B)(ii) of section 41(h) of such Code are each amended by 
        striking ``$250,000'' and inserting ``$500,000''.
            (2) Qualified small business gross receipts threshold.--
        Section 41(h)(3)(A)(i)(I) of such Code is amended by striking 
        ``$5,000,000'' and inserting ``the dollar amount in effect for 
        the taxable year under section 448(c)(1)''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to taxable years beginning after December 31, 2020.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to taxable years beginning after December 31, 2019.
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