The new Inflation Reduction Act contains a provision that provides tax relief for small businesses. Under current law, qualified small businesses can elect to claim a portion of their research credit as a payroll tax credit against their employer Social Security tax liability, rather than against their income tax liability. A qualified small business can now claim up to $250,000 of its credit for increasing research activities as a payroll tax credit. Under the new law, qualified small businesses can apply an additional $250,000 in qualifying research expenses as a payroll credit against the employer share of Medicare. This provision takes effect for tax years beginning after Dec. 31, 2022.