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Endangered Federal Tax Deductions & Benefits 

Photo: John Rowley | Photodisc | Getty Images

» more from Risk & You 2011 - Special Report

Research and Development Credit for Businesses

The research and development tax credit celebrated its 30th anniversary in September. The basic credit rate is 20 percent and expires Dec. 31. Historically, the credit has been extended for a year or two, and sometimes allowed to expire and be restored retroactively, said Gleckman of the Urban Institute.

Although the tax credit is popular, there’s room for improvement, said Zerbe of the Alliant Group. For example, raising the credit and offering a higher rate for small businesses would be a good start.

Both the administration and Congress have proposed raising the R&D tax credit as well as the related alternative simplified credit or ASC, a simpler way for businesses to calculate the credit. “It can be a life saver for a small business owner,” Zerbe said.

Photo: John Rowley | Photodisc | Getty Images