Mental Health Research Accelerator

Summary#

This bill would add a new federal tax credit for translational research on neurodegenerative diseases and psychiatric conditions. The credit equals 25% of amounts paid or incurred in a taxable year that are necessary for such translational research. The bill sets annual national limits on the total credit available: $1,000,000,000 for 2026, $2,000,000,000 for each year 2027–2030, and $1,000,000,000 for 2031. The Secretary of the Treasury must allocate the available credit amounts among applicants, and must issue regulations in consultation with HHS, the FDA, and the NIH. The regulations must set an application process and require allocation based on scientific merit, include all phases of research, emphasize new therapeutics and devices for central nervous system disorders, set standards for repurposing drugs and devices, and set standards for public-private partnerships with priority for collaboration and sharing intellectual property held by tax-exempt entities.

The bill allows certain tax-exempt entities (federal, state, tribal, or local government entities and 501(c)(3) organizations) to elect to transfer all or part of their credit to an "eligible project partner" identified in the allocation application. The partner that receives the transfer is treated as the taxpayer for that portion of the credit. The bill also includes special rules for partnerships and timing rules for when a partner may take the credit.

The bill says expenses counted under this new credit generally cannot also be counted for the existing credit for increasing research expenditures (section 41) for the same taxable year, though those expenses may be used to determine base period research expenses for future section 41 calculations. It adds a rule that disallows deductions equal to the amount of this credit for the same expenses. The credit is added to the general business credit rules. The credit would not be allowed for taxable years beginning after December 31, 2035. The amendments take effect on the date of enactment.

What it means for you#

  • Businesses or other taxable entities doing qualifying translational research may claim a 25% tax credit for qualifying expenses, but the credit is subject to allocation and national annual limits.
  • Tax-exempt organizations cannot directly use the credit; they may elect to transfer all or part of the credit to an eligible project partner who then claims it.
  • The Treasury will set application and allocation rules under regulations made with HHS, FDA, and NIH. Details of the application process and allocation timing are not specified in the bill text.
  • Expenses taken under this credit cannot also be used to claim the section 41 research credit for the same year, and taxpayers must reduce deductions by the amount of the credit for those expenses.

Expenses#

  • Qualifying expenses are those "necessary for translational research regarding neurodegenerative diseases and psychiatric conditions." The bill text does not list specific expense types or dollar thresholds.
  • The credit rate is 25% of qualifying expenses paid or incurred in the taxable year.
  • Expenses used for this credit generally may not be used to claim the section 41 research credit in the same year, but they can count toward base period research expenses for future section 41 calculations.
  • The bill disallows a deduction equal to the credit amount for expenses taken into account under this section.
  • The credit is available through projects allocated from the national limit in specified calendar years and ends for taxable years beginning after December 31, 2035.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.