The US introduced a new “refundable” tax credit for startups. Commencing in 2017, companies will be able to apply up to $250,000 to offset payroll withholdings on behalf employees.

According to Miller & Chevalier, CPAs:

For purposes of the credit, a “qualified small business” is an employer with gross receipts of less than $5 million in the current taxable year and no more than five taxable years with gross receipts.  Qualified small businesses may claim the R&D payroll tax credit in tax years beginning after December 31, 2015.


business-incentives-us-statesIt appears that the applicable amount of the federal credit is capped at $250,000 per year – for a maximum of 5 years. The effective amount of the benefit federally appears to be about 10% of qualifying wages (“QREs”) – compared with 54.25% in Canada. If QREs exceed $1 million Canadian, the percent will start to decline. State incentives for R&D include job credits, R&D tax credits and a variety of investment credits.

Hopefully Canada’s Federal Government will take this into account in their review of supports for the knowledge-based industry ecosystem.