[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4933 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 4933
To amend the Internal Revenue Code of 1986 to expand eligibility and
increase simplification of the research credit for certain small
businesses.
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Research and Development Tax Credit
Expansion Act of 2025''.
SEC. 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.
SEC. 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.
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