Bill Would Provide Assistance to Michigan Small Businesses and Startups to Invest in R&D
WASHINGTON, DC – U.S. Senator Gary Peters (MI) helped introduce the American Innovation and Jobs Act, bipartisan legislation that would expand and strengthen research and development (R&D) incentives for American small businesses and startups. The bill – which Peters reintroduced with U.S. Senators Todd Young (R-IN) and Maggie Hassan (D-NH) – would help the U.S. outcompete and out-innovate our global competitors, particularly China, who are significantly investing in R&D.
“From putting the world on wheels to producing the aircraft and vehicles that led the Allied Forces to victory in World War II, Michigan has long excelled at developing cutting-edge technologies that have kept our state and nation competitive on the world stage,” said Senator Peters. “This bipartisan, commonsense bill would help ensure Michigan small businesses and startups can continue to spearhead innovation that keeps us competitive against our adversaries like China by boosting federal support for R&D, while creating good jobs for Michigan workers in the process.”
Businesses and startups that invest in R&D have long been able to either claim a tax credit or deduct their investments. This support enables them to invest in developing new, innovative products that help create jobs and build a stronger economy. With the goal of increasing investment in cutting-edge American technologies, the American Innovation and Jobs Act would restore and make permanent U.S. businesses’ ability to deduct their R&D costs from their taxable income in the year in which those costs were incurred. In addition, the bill would also expand the cap for the refundable R&D tax credit, which is a critical tool for small businesses that are just getting off the ground. Prioritizing R&D investment is essential now more than ever as U.S. foreign adversaries like China are attempting to out-innovate the United States.
Specifically, the American Innovation and Jobs Act would:
Restore incentives for long-term R&D investment by ensuring that companies can continue to fully deduct R&D expenses each year.
Expand support for innovative startups by immediately doubling the current cap on the refundable R&D tax credit to $500,000, and ultimately raising it to $750,000 over ten years. The bill would also expand access to the R&D tax credit for startups by lowering certain thresholds needed to qualify.
Expand the number of startups eligible to use the refundable R&D tax credit by increasing the eligibility threshold from $5 million to $15 million in in annual revenue. It would also extend the period during which startups can claim the credit from 5 years to 8 years after beginning to generate at least $25,000 in revenue.
The legislation is endorsed by the R&D Coalition, which includes numerous organizations such as Business Roundtable, National Association of Manufacturers, Information Technology Industry Council, and the U.S. Chamber of Commerce.
Peters has long led efforts to support American innovation and help U.S. businesses compete in the global marketplace. Peters helped craft and pass into law the CHIPS and Science Act, which invested $170 billion in research and development for cutting-edge scientific advancements. This law also invested heavily in strengthening our domestic supply chains for critical semiconductor technologies to create good-paying American jobs and keep the U.S. competitive on the world stage. Peters additionally helped pass the Inflation Reduction Act, which will strengthen domestic manufacturing, onshore our supply chains, and create millions of American jobs.
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