Young companies–those fewer than five years old–are responsible for the majority of new American jobs. However, the existing research and development tax credit often overlooks these companies, since younger firms generally don’t have enough income tax liability to qualify.
The legislation, co-sponsored by Republicans Mike Enzi and Marco Rubio as well as Democrat Chuck Schumer, aims to allow small, young companies to apply the tax credit to their payroll tax liability.
Any company less than five years old and with gross receipts less than $5 million will be eligible for the new tax credit, enabling them to reduce their employer-side payroll tax bill by up to $250,000.
Bob Dayton, president of Delaware Bio, said, “The Startup Innovation Credit will create jobs and speed up innovation, helping early-stage companies like many of those that belong to Delaware Bio…Startups that are investing in innovation have enormous potential to grow and create jobs, and the Startup Innovation Credit is a creative way to help nurture that potential when it will have the greatest impact.”
The companion bill will be introduced in the House next week by Republican Cong. Jim Gerlach, R-Pa.