Research and development expenses; modifies the existing tax credits. (SB58)

Introduced By

Sen. Ryan McDougle (R-Mechanicsville) with support from co-patron Sen. Bryce Reeves (R-Spotsylvania)

Progress

Introduced
Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law

Description

Research and development expenses tax credits. Modifies the existing research and development expenses tax credit and creates a similar tax credit for businesses with Virginia research and development expenses in excess of $5 million for the taxable year. The bill changes the existing tax credit by (i) extending the expiration date from January 1, 2019, to January 1, 2026, (ii) increasing the credit from 15 percent of the first $234,000 of the business' Virginia qualified research and development expenses that exceed a base amount to 15 percent of the first $300,000 of such expenses and from 20 percent of the first $234,000 of such expenses to 20 percent of the first $300,000 of such expenses if the research and development was conducted in conjunction with a Virginia college or university, (iii) establishing an alternative computation for the tax credit at the election of the taxpayer beginning with taxable year 2016, and (iv) increasing from $6 million to $7 million the maximum amount of tax credits that may be granted by the Department of Taxation for each fiscal year beginning with fiscal year 2017. Under current law, a taxpayer is allowed a refundable credit equal to (a) 15 percent of the first $234,000 of the taxpayer's Virginia qualified research and development expenses that exceed a base amount or (b) if the research and development was conducted in conjunction with a Virginia college or university, 20 percent of the taxpayer's first $234,000 in Virginia qualified research and development expenses that exceed a base amount. Under the alternative computation established by the bill for the existing credit, the taxpayer will be allowed a refundable tax credit equal to 10 percent of the difference of (1) the taxpayer's Virginia qualified research and development expenses for the current taxable year and (2) 50 percent of such taxpayer's average Virginia qualified research and development expenses for the immediately preceding three taxable years. If the taxpayer did not pay or incur Virginia qualified research and development expenses in any one of the immediately preceding three years, the credit will equal five percent of the taxpayer's Virginia qualified research and development expenses for the current taxable year. The maximum credit allowed to a taxpayer each year under the alternative computation will be $45,000 or $60,000 if the research and development was conducted in conjunction with a Virginia public or private college or university. The bill also creates a new tax credit beginning with taxable year 2016 for businesses with Virginia research and development expenses in excess of $5 million for the taxable year. The new tax credit will include the same elements as described above for the alternative computation, except that it is not refundable and there is no annual limit on the maximum amount of credits allowed to the taxpayer. In addition, the Department may grant up to $25 million in tax credits each fiscal year beginning with fiscal year 2017. The amount of the new tax credit that may be claimed by the taxpayer for each year will be limited to 75 percent of the taxpayer's Virginia income tax liability for the year. Any unused credit for the year may be carried forward and applied against the taxpayer's income taxes in the next 10 succeeding taxable years. The new research and development expenses tax credit expires January 1, 2026. The bill prohibits a taxpayer from claiming both the existing and new research and development expenses tax credit for the same taxable year. Amends § 56-585.2, § 58.1-439.12:08, of the Code of Virginia. Read the Bill »

Outcome

Bill Has Passed

History

DateAction
12/16/2015Prefiled and ordered printed; offered 01/13/16 16102137D
12/16/2015Referred to Committee on Finance
02/01/2016Impact statement from TAX (SB58)
02/08/2016Impact statement from TAX (SB58)
02/09/2016Impact statement from TAX (SB58)
02/10/2016Reported from Finance with substitute (14-Y 0-N) (see vote tally)
02/10/2016Committee substitute printed 16105094D-S1
02/10/2016Incorporates SB161
02/11/2016Constitutional reading dispensed (40-Y 0-N) (see vote tally)
02/12/2016Read second time
02/12/2016Reading of substitute waived
02/12/2016Committee substitute agreed to 16105094D-S1
02/12/2016Engrossed by Senate - committee substitute SB58S1
02/12/2016Constitutional reading dispensed (39-Y 0-N) (see vote tally)
02/12/2016Passed by for the day
02/15/2016Read third time and passed Senate (38-Y 0-N) (see vote tally)
02/15/2016Reconsideration of passage agreed to by Senate (39-Y 0-N) (see vote tally)
02/15/2016Passed Senate (39-Y 0-N) (see vote tally)
02/17/2016Placed on Calendar
02/17/2016Read first time
02/17/2016Referred to Committee on Finance
02/19/2016Impact statement from TAX (SB58S1)
02/22/2016Reported from Finance (22-Y 0-N) (see vote tally)
02/23/2016Read second time
02/24/2016Read third time
02/24/2016Passed House BLOCK VOTE (100-Y 0-N)
02/24/2016VOTE: BLOCK VOTE PASSAGE (100-Y 0-N) (see vote tally)
02/25/2016Enrolled
02/25/2016Bill text as passed Senate and House (SB58ER)
02/25/2016Impact statement from TAX (SB58ER)
02/25/2016Signed by Speaker
02/26/2016Signed by President
02/29/2016Enrolled Bill Communicated to Governor on 2/29/16
02/29/2016G Governor's Action Deadline Midnight, March 7, 2016
03/07/2016G Approved by Governor-Chapter 300 (effective 7/1/16)
03/07/2016G Acts of Assembly Chapter text (CHAP0300)

Video

This bill was discussed on the floor of the General Assembly. Below is all of the video that we have of that discussion, 3 clips in all, totaling 3 minutes.

Transcript

This is a transcript of the video clips in which this bill is discussed.

ALL IN FAVOR SAY AYE. THOSE OPPOSED, NO. THE AYES HAVE IT. THE FLOOR AMENDMENT IS AGREED TO. SENATE BILL 58, REPORTED FROM THE COMMITTEE ON FINANCE WITH SUBSTITUTE. THE NOR FROM HANOVER, SENATOR McDOUGLE. I MOVE THE COMMITTEE SUBSTITUTION BE AGREED TO. ALL IN FAVOR SAY AYE. THOSE OPPOSED, NO. THINGAHAVE IT. THE SUNDAY IS AGREED TO. THE SUBSTITUTE IS AGREED TO. SENATE BILL 291, REPORTED FROM THE COMMITTEE FOR COURTS OF JUSTICE WITH SUBSTITUTE.
ARE THE SENATORS READY TO VOTE? HAVE ALL THE SENATORS VOTED? DO ANY SENATORS DESIRE TO CH ANGE THEIR VOTE? THE CLERK WILL CLOSE THE ROLL. AYES 39, NOS 0. AYES 39, NOS 0. THE MOTION IS AGREED TO. THE SENATOR FROM HANOVER? MR. PRESIDENT, HAVING PREVIOUSLY BEEN EXPLAINED I MOVE THE BILL PASS.