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updated 2/7/2013 3:50:00 PM ET 2013-02-07T20:50:00

Entrepreneurs could benefit from a new research and development tax credit that has been proposed by bipartisan lawmakers in Congress. If it passes, the tax credit would bring serious savings to startups that spend money on innovation before they have turned a profit.

Dubbed the Startup Innovation Credit Act of 2013, the bill would allow qualifying companies to claim the Research and Development Tax Credit against their employment taxes. Typically, a business deducts its research and development expenses from its taxable profits, which means the current R&D tax credit is useless for any startup that has not yet started making a profit. Under the proposed bill, if a startup is not yet making profit, it will still be able to reap a reward for investing in innovation by deducting its R&D spending from its employment spending.

To qualify for the tax credit, a startup must be fewer than 5 years old and have less than $5 million in total revenues. The startup would be able to deduct the total amount it spent on R&D up to $250,000 frm its employment taxes the following year. 

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Representatives Jim Gerlach (R, Pa.) and Ron Kind (D, Wi.) are expected to introduce the bill in the House of Representatives later this week that would mirror the Senate's version, according to a release from Senator Chris Coons' (D, Del.) office. Gerlach's office said it was still working with the House Committee on Ways and Means to determine a specific date for introducing its version of the bill. The Senate introduced its version last Thursday.

In the Senate, Coons and Mike Enzi (R, Wyo.) teamed up with Senators Chuck Schumer (D, N.Y.), Marco Rubio (R, Fla.), Roy Blunt (R, Mo.), Debbie Stabenow (D, Mich.), and Jerry Moran (R, Kan.) in re-introducing the bill which was initially brought to the Senate floor in the summer of 2012.

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Historically, the R&D tax credit has primarily benefited large companies. Over half of the R&D tax credit taken in 2012 was taken by companies generating over $1 billion in revenue, said Coons on the Senate floor last week. "This gaping hole in our policy around R&D can be fixed, I think, with a relatively simple tweak," said Coons. "Rather than shutting our startups out of the R&D tax credit, let's open the doors to these innovators and see what they can do."

Would this tax credit benefit your startup and if so, what would you do with the savings? Leave a note below and let us know.

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