H.R. 4933

119 HR 4933 IH: Research and Development Tax Credit Expansion Act of 2025
 U.S. House of Representatives
 2025-08-08
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 I  119th CONGRESS  1st Session  H. R. 4933  IN THE HOUSE OF REPRESENTATIVES   August 8, 2025   Mr. Neguse  introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to expand eligibility and increase simplification of the research credit for certain small businesses.
1.
Short title
This Act may be cited as the   Research and Development Tax Credit Expansion Act of 2025  .
2.
Expansion of refundable research credit for new and small businesses
(a)
Adjustment for inflation
Paragraph (4) of section 41(h) of such Code is amended—
(1)
by redesignating subparagraph (C) as subparagraph (D),
(2)
by redesignating clause (ii) of subparagraph (B) as subparagraph (C), and by moving such subparagraph 2 ems to the left,
(3)
by striking
Limitations   in the heading of subparagraph (B) and inserting
Limitation on amount of election  ,
(4)
by striking
Amount   in the heading of clause (i) of subparagraph (B) and inserting
In general  , and
(5)
by adding at the end of subparagraph (B), as amended by the preceding subparagraphs of this paragraph, the following new clause:
(ii)
Adjustment for inflation
In the case of a taxable year beginning after 2026, the dollar amounts in clause (i) shall be increased by an amount equal to—
(I)
such dollar amount, multiplied by
(II)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting  2025  for  2016  in subparagraph (A)(ii) thereof.
  If any increase under the preceding sentence is not a multiple of $100, such increase shall be rounded to the nearest multiple of $100.
 .
(b)
Credit refundable against unemployment taxes
(1)
In general
 Section 3111(f)(1)(B)  of the Internal Revenue Code of 1986 is amended by striking  subsection (b)  and inserting  subsection (b) and section 3301 .
(2)
Conforming amendments
(A)
Paragraph (2) of section 3111(f) of such Code is amended by striking  the tax imposed by subsection (b)  and inserting  the sum of the taxes imposed by  Comprehensive Legislation Ensuring Accountability and Responsiveness Act of 2025 , subsection (b), and section 3301 .
(B)
Section 3302 of such Code is amended by adding at the end the following new subsection:
(i)
Credit for research expenditures of qualified small businesses
Any portion of the credit under section 3111(f) which is credited under such section to the tax under section 3301 shall be treated as a credit under this section. Subsection (c) shall not apply to any such credit.
 .
(c)
Qualified small business definition expanded
Section 41(h)(3)(A) of such Code is amended—
(1)
in clause (i)(I), by striking  $5,000,000  and inserting  $10,000,000 ,
(2)
by amending clause (i)(II) to read as follows:
(II)
such entity did not have gross receipts (as so determined) exceeding an aggregate of $25,000 for any taxable year preceding the 10-taxable-year period ending with such taxable year, and
  , and
(3)
by adding at the end the following flush sentence:
    For purposes of the preceding sentence, gross receipts shall be determined under the rules of section 448(c)(3) without regard to subparagraph (A) thereof, except that such term shall not include any contributions to the capital of a corporation (other than contributions by a shareholder) or any amount described in section 118(b) (other than receipts from customers in exchange for goods or services).  .
(d)
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
3.
Modifications to alternative simplified credit for new and small businesses
(a)
In general
Paragraph (4) of  section 41(c)  of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
(D)
Special rules for qualified small businesses
In the case of a qualified small business (as defined in subsection (h)(3))—
(i)
Credit rate
Subparagraph (A) shall be applied by substituting  20 percent  for  14 percent .
(ii)
Special rule for 1st year of qualified research expenses
If the taxpayer has no qualified research expenses in any taxable year preceding the taxable year for which the credit is being determined, subparagraph (B)(ii) shall be applied by substituting  20 percent  for  6 percent .
(iii)
Special rule for other years
If the taxpayer is not described in clause (ii) for the taxable year, and subparagraph (B) applies to such taxpayer for such year, at the election of the taxpayer—
(I)
subparagraph (B)(ii) shall be applied by substituting  10 percent  for  6 percent , or
(II)
subparagraph (B) shall not apply, and the average under subparagraph (A) shall be determined by disregarding any taxable year in the 3-year period described in such subparagraph in which there were no qualified research expenses.
 .
(b)
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2025.