Senate Passes R&D Tax Credit Extension

The Senate has approved legislation that includes more than $30 billion in one-year extensions of tax breaks that expired at the end of 2009, including the credit that encourages companies to conduct R&D activities in the U.S. The measure would retroactively extend the R&D credit for one year but falls short of making the tax break permanent, a key legislative priority for the chemical industry and other manufacturers. “The uncertainty of our nation’s tax laws impairs our members’ ability to make effective business decisions,” says Lawrence D. Sloan, president of the Society of Chemical Manufacturers & Affiliates, which represents batch chemical makers. “Not knowing whether the R&D credit will be extended makes it harder for companies of all sizes to manage their research budgets, and could even lead some companies to locate research projects in foreign countries with more attractive incentives,” Sloan adds. The credit is available only for certain qualified research performed in the U.S. In its proposed fiscal 2011 budget, the Obama Administration also called for making the R&D credit permanent. The tax extension bill (H.R. 4213) must now pass the House.