Inflation Reduction Act Expands Payroll Research Tax Credit

The maximum payroll research tax credit available to qualified small businesses will increase by $250,000 to $500,000 for tax years beginning in 2023 or later under the Inflation Reduction Act that was signed by President Joe Biden (D) on Aug. 16.

Qualified small businesses may receive a payroll research tax credit for certain research expenses that is applied to the employer portion of their Social Security tax. Qualified small businesses are defined in the Internal Revenue Code as corporations and partnerships that have less than $5 million in gross receipts for the current tax year and did not have gross ...