President Extends R and D Tax Credit for Manufacturers

Recent efforts in Washington pertaining to the current economic crisis have produced a decision that may come as a benefit to product manufacturers. After months of negotiations, democrats, republicans and the White House came together to pass an increase and extension of the R and D Tax Credit as part of the Emergency Economic Stabilization Act of 2008.

The federal R and D Credit provides companies with an opportunity to claim an income tax credit for activities centered on the development or improvement of products, processes, software, techniques or formulas. This credit potentially generates significant tax savings for US companies in the manufacturing sector.

"At a time when the economy is struggling and international competition continues to battle U.S. companies, the R and D Credit is a critical part of the solution for success," says Michael Krajcer, a partner in Cincinnati-based Tax Projects Group and the firm's technical director. "While we would like to see the R and D Credit become permanent part of the tax law, we applaud Congress and the White House for extending this important tax incentive." Krajcer is an attorney who spent 13 years with the IRS auditing large-case R and D Credit claims. "This extension of the R and D Credit is another strong Congressional indicator for taxpayers to continue taking advantage of this incentive."

The Federal Research and Development Tax Credit has been extended two years through December 31, 2009.