Published: May 21, 2010 11:41 AM EDT
Updated: May 21, 2010 11:40 AM EDT

WASHINGTON (AP) - The Internal Revenue Service on Friday

released the guidelines that small companies can use to apply for

tax credits to spur medical research.

The credit will cover up to 50 percent of the cost of qualifying

biomedical research, up to a maximum credit of $5 million per

business. The credit is only available to companies with fewer than

250 employees.

"This new tax credit will help advance research to find

lifesaving treatments and help U.S. companies lead the way in

innovative medical discoveries," Treasury Secretary Timothy

Geithner said in a statement.

The IRS released the rules companies will need to follow to

apply to have their research projects certified as eligible to

participate in the government's Therapeutic Discovery Project


The tax credit, which will be available for investments made in

2009 and 2010, was included in the sweeping health care overhaul

legislation that President Barack Obama signed into law in March.

Companies may submit applications for certification for the

credit beginning on June 21. As part of the review process, the

Health and Human Services Department will evaluate each project for

its potential to produce new therapies or reduce health care costs.

Only projects that show a reasonable potential to meet these

goals will be certified as eligible for the tax credit. The IRS

will issue the certifications by the end of October.

The biotechnology industry employs 1.3 million workers in the

United States.