Congress enhanced the r&d tax credit opportunity for taxpayers with the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015.
1) the credit was made permanent
2) the credits can be used to reduce payroll taxes for certain companies
3) the credits can be used to reduce AMT for certain taxpayers
These changes are the most sweeping enhancements benefiting taxpayers since the r&d credit was enacted.
One of the biggest roadblocks preventing the immediate use of the credits has just been removed. Many taxpayers generated sizable credits only to carry them forward year after year since the rules prevented them from reducing their alternative minimum tax liability. With this restriction removed many taxpayers will be able to convert their credits into cash much more quickly.
Start-up and smaller companies with less than $5 million in sales no longer need taxable income to use their credits. They can now reduce their payroll tax liability by their r&d credits.