The research and development (R&D) tax credit was created by the U.S. Congress as part of the economic recovery tax act of 1981 to encourage American industry to invest in research and development activities. The purpose of the credit, documented in section 41 of the internal revenue code, is to stimulate R&D activities among businesses through tax incentives. Because of the stringent requirements that existed under the provisions of the credit, however, the vast majority of small and midsize companies are unable to reap any substantial benefit from them. The R&D tax credit drives billions of dollars in economic activity and is credited with keeping thousands of high‐skilled jobs here in the United States.