Legislative update - House passes bill to make research credit permanent 

May 9:  The U.S. House of Representatives today approved H.R. 4438—a bill that would make the research credit permanent, retroactively to January 1, 2014.

The vote was 274-131.


Besides making the research credit permanent, the legislation would repeal the traditional method of computing the research credit, and make the Alternative Simplified Credit (ASC) method—which has been elective—the only way to compute the credit. The ASC rate would be raised from 14% to 20%. The credit for basic research expenditures would be simplified. These changes would be effective for tax years beginning after 2013.

The White House issued a release stating that the president would veto the legislation because of the bill’s cost—$156 billion over 10 years, according to the Joint Committee on Taxation. The White House statement says:

If this same, unprecedented approach of making major traditional tax extenders permanent without offsets were followed for the other traditional tax extenders, it would add $500 billion or more to deficits, wiping out most of the deficit reduction achieved through the American Taxpayer Relief Act of 2013.

On April 3, 2014, the Senate Finance Committee approved legislation extending 53 expired provisions for two years at a net cost of $85 billion. That bill, S. 2260, is pending in the Senate.




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