Lower tax rate causes increased reduced credit election percentage
The Tax Cuts and Jobs Act (H.R. 1) was signed into law by President Trump on Dec. 22, 2017. Of its many provisions, one of the key highlights of tax reform is the well-publicized reduction in corporate tax rates from 35 percent to 21 percent. On its face, lower corporate tax rates suggest that credits against tax, such as the R&D tax credit under section 41, would be somewhat less valuable as corporations presumably have lower taxes to offset. While this certainly could be the result for some taxpayers, R&D tax credits actually increase as a result of statutory provisions.
Source: RSM US LLP.
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