Federal Budget for 2022 Fiscal Year Increases R&D Funding
“Where we choose to invest speaks to what we value as a Nation.” – President Biden
The budget for the 2022 fiscal year has unique challenges as the office strives to confront the pandemic and rescue the economy from its effects. Part of this economic effect is seen in the nation falling behind its biggest competitors in research and development. With this in mind, the new budget once again renews its commitment to R&D.
The budget proposes historic increases in funding for foundational R&D across a range of scientific agencies including:
- National Science Foundation
- National Aeronautics and Space Administration
- Department of Energy
- National Institute of Standards and Technology
The budget includes plans to invest in R&D, revitalize manufacturing and small businesses, and focus on technologies of the future. The budget outlines investment plans for 2022-2031 in these areas:
- Fund research infrastructure, including Historically Black Colleges and Universities
- Increase R&D for existing programs
- Transform the NSF by adding a technology doctorate
- Increase climate-focused research
- Increase demonstration funding at energy programs
- Launch Advanced Research Projects Agency-Climate
- Create STEM centers of Excellence
- Fund STEM education and training
In Fiscal Year 2021, federal spending on R&D was around $157 billion. The president’s Fiscal Year 2022 budget would increase that number to $171 billion.
While these commitments can help the nation achieve innovation, the commitment also spreads to any business conducting their own R&D efforts. To support small business innovation, the budget incorporates plans to create a national network of small business incubators and innovation hubs, connecting businesses together to drive innovation. This budget commits to funding and supporting innovation across the nation in a 9% increase, creating hundreds of thousands of quality jobs.
How do these commitments stack up against historical R&D funding?
Federal funding for R&D has grown from $3.5 billion in 1955 to $138.9 billion in 2019 (in current American dollars). This shows a compound annual growth rate of 5.9%. A dip in federal funding between 2011 and 2014. To rebound from this, a 2.1%, 4.1%, and 5.3% increase in funding over the course of 2017-2019 respectively. The 2022 budget supports this continued increase in R&D funding through the federal R&D tax credit and innovation grants.
Are you conducting research and development activities? Did you know your development work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? Even if your development isn’t successful your work may still qualify for R&D credits (i.e. you don’t need to have a patent to qualify). To find out more, please contact a Swanson Reed R&D Specialist today or check out our free online eligibility test.
Who We Are:
Swanson Reed is one of the U.S.’ largest Specialist R&D tax advisory firms. We manage all facets of the R&D tax credit program, from claim preparation and audit compliance to claim disputes.
Swanson Reed regularly hosts free webinars and provides free IRS CE and CPE credits for CPAs. For more information please visit us at www.swansonreed.com/webinars or contact your usual Swanson Reed representative.
