This bill proposes significant changes to the research and development (R&D) tax credit by increasing both the aggregate value of tax credits available and the maximum credit amount that can be claimed by individual entities. Specifically, the aggregate cap on R&D tax credits issued by the commissioner will rise from $7,000,000 to $10,000,000 for any fiscal year. Additionally, the maximum credit amount that a single taxpayer can claim will increase from $50,000 to $100,000. These changes are set to take effect on January 1, 2026, and applications for the tax credit must be submitted by June 30 following the tax year in which the R&D expenditures occurred.

The fiscal impact of this bill is projected to decrease revenue from the Business Enterprise Tax (BET) and Business Profits Tax (BPT) by an indeterminable amount, with an estimated maximum impact of $3,000,000 in the first year if the full amount of the tax credit increase is claimed. However, the exact fiscal implications for subsequent years remain uncertain due to the nature of carry-forward credits. The Department of Revenue Administration will need to update tax return forms and electronic systems to accommodate these changes, but it does not anticipate any additional costs beyond what can be managed within its existing budget.

Statutes affected:
Introduced: 77-A:5
As Amended by the Senate: 77-A:5