May 4, 2020

Young joins bipartisan, bicameral bill to boost federal investment in American R&D, including vaccine research

WASHINGTON – Today, U.S. Senators Todd Young (R-Ind.), Chris Coons (D-Del.), Pat Roberts (R-Kan.), Catherine Cortez Masto (D-Nev.), Maggie Hassan (D-N.H.), and Steve Daines (R-Mont.), along with U.S. Representatives Suzan DelBene (D-Wash.) and Jackie Walorski (R-Ind.), introduced legislation to provide expanded tax support for American companies that invest in the research and development of new products and technologies.


“The private sector will help America emerge from the coronavirus pandemic and prepare for future emergencies,” said Senator Young. “Government should work to encourage our small businesses to conduct the research and development needed to produce vaccines and other critical technologies right here in the U.S.”


“Our country is facing an unprecedented challenge, but I know we will emerge even stronger because of American innovation and entrepreneurial spirit,” said Representative Walorski. “Boosting investment in research and development – including for new treatments and vaccines – will not only help in the fight against coronavirus, it will put America’s small businesses and manufacturers on the best path to rebuilding our economy.”


The United States spends far less supporting R&D than international competitors. This places American businesses at a disadvantage, undermining the U.S. economy and leaving the country ill-prepared for crises like COVID-19. In 2015, Congress passed legislation authored by Senators Coons and Roberts to make the R&D tax credit permanent and to expand access to the credit for more startups and small businesses. These changes addressed urgent problems, but – as the current crisis makes clear – further steps are needed. 


The Furthering Our Recovery With American Research and Development, or FORWARD, Act:

  • Expands access to the research and development tax credit for new small- and medium-sized businesses. Firms with up to $20 million in gross receipts will be eligible to use the credit to reduce their payroll tax obligation during a span of 8 years—up from current thresholds of $5 million and 5 years. A new de minimis threshold delays the start of the 8-year window until gross receipts exceed $25,000.
  • Strengthens the economy by incentivizing American manufacturing. The R&D credit is increased for companies that generate the majority of their gross receipts from manufacturing their products in the United States. 
  • Targets specific activities that enhance economic productivity by spreading knowledge and work opportunities to the U.S. workforce. The full R&D credit is expanded to cover R&D-related worker training costs. For R&D performed in collaboration with industry consortia, academic institutions, federal laboratories, and other entities, the credit rate is increased by one quarter (to 25% and 17.5% for the Regular Research and Alternative Simplified Credits, respectively). 
  • Activates the R&D credit by providing outreach, education, and training for businesses with limited accounting expertise, to be provided by the Small Business Administration and the Internal Revenue Service.


The bill text is available here.


A one-pager on the bill is available here.