Bill > HR4696

This bill, the Startup Innovation Credit Act of 2014, aims to help qualified small businesses by allowing them to use a portion of their research and development (R&D) credit to offset their payroll taxes. Specifically, it amends the Internal Revenue Code of 1986 to enable these businesses, defined as those with less than $5 million in gross receipts and no prior history of such receipts in the preceding five years, to elect to apply a portion of their R&D credit, up to $250,000 per year, against the FICA (Federal Insurance Contributions Act) taxes they owe. This means that instead of only being able to use the R&D credit to reduce their income tax liability, eligible startups can now use it to directly pay down their Social Security and Medicare taxes, which are a significant expense for growing companies. The bill also includes provisions for aggregation rules to prevent abuse and outlines the process for making such an election, with the changes taking effect for taxable years beginning after December 31, 2013.