Congress took a major step in supporting U.S. manufacturing and innovation today by voting to make the federal Research and Development (R&D) tax credit permanent. SEMI has been working to make the popular tax incentive a permanent part of the tax code since the R&D credit was first established in 1981.
“SEMI members invest and average of 15 percent of their revenues back into R&D activities every year,” said SEMI president & CEO, Denny McGuirk. “Being able to count on the R&D tax credit is immensely important to our members, which are some of the most innovative companies in the world.”
In its temporary status, the credit was widely used by many SEMI member companies; however, it was often not reliable because of its temporary status. In the past 34 years, the credit had expired 17 times, and on more than one occasion, was expired for almost an entire tax year before being retroactively reinstated. By making the credit permanent, companies will now be able to plan their long term research and development projects with greater certainty.
The permanent provision for innovation-supporting tax policy was included in the wide-ranging year-end “tax extenders” bill that was then combined with the omnibus appropriations legislation to fund the government through September 2016. Included in the same legislation is an extension of the popular solar energy Investment Tax Credit (ITC). The 30 percent ITC, which was set to be reduced to 10 percent at the end of 2016, has been critical to the wide-scale deployment of solar photovoltaic panels in the U.S. With the passage of this bill, the 30 percent credit will be extended until 2019, and then gradually phased down to 10 percent at the end of 2021.
“Both the R&D Credit and the ITC are good examples of why SEMI engages with policymakers in Washington, D.C. on behalf of our members,” continued McGuirk. “SEMI, our members, and many others in the high tech community have long advocated for this change. Our collective persistence has resulted in important and meaningful support for innovation.”
SEMI is the global industry association serving the electronics manufacturing supply chains.