Lawmakers and advocates debate scope of research tax credit and distribution method

During consideration of HB2546, supporters described the research tax credit as a long-standing tool that local companies depend on to make capital-intensive R&D investments viable. Representatives of development organizations urged the committee to restore full eligibility for qualified research expenses and to make the credit refundable or pro rata rather than first-come, first-served.

At least one committee member expressed concern (SEG 1631 onward) that making the credit available for ongoing R&D departs from the federal aim of incentivizing 'new' research. The member said state limited resources might better be distributed through a grant program to target new projects. The Tax Foundation earlier also noted the bill contained blank metrics and urged the committee to fill them in before final action.

The chair recommended amendments to add language allowing refundability, a pro rata distribution mechanism, and to apply the act retroactively to the 2025 tax year; the committee adopted the recommendation.