Policy Priority: R&D Tax Credit and NOL DeductionsBack
The restoration of California’s Research and Development (R&D) tax credit and Net Operating Loss (NOL) deduction has been one of California Life Sciences’ (CLS) top priorities for 2021. Last year, the California Legislature placed a cap of $5 million on R&D tax credits due to the grave uncertainty of a pandemic-induced economic shutdown in 2020. Currently, the state is experiencing historic surplus levels—upwards of $76 billion and growing. As a result, CLS and its member companies have made a strong push to re-instate the full R&D tax credits for the life sciences industry, especially in light of the vital role our industry played in producing therapeutics and vaccines for COVID-19.
The first iteration of this restoration effort was via AB 593 (Golden State Innovation Act of 2021), which was authored by Assemblymember Petrie-Norris (D-Orange County) and Assemblymember Mullin (D-S. San Francisco). Additionally, CLS and its member companies were able to get 30 Assemblymembers and Senators to co-author or sign onto a letter supporting R&D restoration for life sciences. Unfortunately, that bill was halted in the Assembly Appropriations Committee.
During the summer recess, CLS and partners pivoted and met with Senate President pro Tem Atkins with member companies from her district to make one last push to restore the credits before the end of session. With Atkins expressing support if we can rally enough votes from her caucus, CLS initiated a Senate letter that was ultimately signed by 20 democrat senators, which was delivered to her by one of her colleagues. CLS also put together a letter signed by major life sciences CEOs, which was delivered to Governor Newsom, Speaker Rendon, and pro Tem Atkins to keep the pressure up on California leaders in these final weeks of session.
Currently, CLS’ R&D tax credit request is currently in the mix of potential final items to be taken up before closing out the 2021 legislative session. CLS and its member companies are tapping into every relationship we collectively have with the Governor’s office, Assembly, and Senate to push for our proposal.
Much will be determined in the following days. CLS will keep its members updated on the very latest.