119-hr4933

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4933 Introduced in House

    (IH) ]

<DOC>

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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