19 August 2022
Share on

Over the weekend, Congress passed the Inflation Reduction Act. The legislation is expected to raise $737 billion and result in a deficit reduction of more than $300 billion.  

This is a substantial piece of legislation, including provisions that deal with the negotiation of drug prices by Medicare and with climate change. Additionally, the legislation establishes policies designed to promote and support domestic energy and transmission projects. The goal is to lower costs for consumers and help the U.S. meet long-term emissions goals.  

Modification to the Payroll TAX R&D Credit   

The new law would permit an additional credit of up to $250,000 to be applied against the Medicare payroll tax for tax years beginning after December 31, 2022.  

Current law permits small businesses that may not have enough income tax liability to take advantage of their research and development credit to apply up to $250,000 of the credit towards their social security payroll tax liability. To qualify, the small business must have less than $5 million of gross receipts and be less than 5 years old.   

Do you have questions about the Inflation Reduction Act and what this means for your business? We can help. Contact us.   

× How can I help you?