Credit for Increasing Research Activities - Qualified Small Business Payroll Tax Election

Lets eligible startups apply their federal research (R&D) tax credit against the employer share of Social Security payroll tax, so they benefit even with little or no income tax liability.

Run by

Internal Revenue Service (U.S. Department of the Treasury)

Funding

Up to $500,000

Payroll tax election limited to $500,000 per year for tax years beginning after December 31, 2022 (previously $250,000).

Who can apply

• Corporation (including S corporation) or partnership
• Gross receipts of less than $5 million for the tax year
• No gross receipts for any tax year before the 5-tax-year period ending with the tax year
• Must have qualified research expenses

How to apply

Elect on Form 6765 with your income tax return, then claim quarterly on Form 8974 attached to Form 941.

Timing

Election must be made on a timely filed original income tax return (including extensions); not on an amended return.

Last checked

2026-10-11

Official page ↗