The majority of OECD countries provide support to R&D both through direct subsidies and, increasingly, by means of tax incentives. For a considerable period of time, Austria has been offering an instrument of fiscal support to R&D – the R&D tax allowance – that is rather generous by international standards. However, the R&D tax allowance shows some weaknesses. The recent reform of fiscal aid for R&D is designed to eliminate some of these weaknesses by additional measures (a new R&D allowance for R&D expenditure based on the OECD definition, an R&D premium for firms that do not manage to make sufficient profit). This reform of tax incentives for R&D does not leave any firm worse off than before. On the other hand, the system of incentives is becoming increasingly complex, which in turn raises the costs of administration and compliance by firms. Until now the actual use and effects of the R&D tax allowance have not been very transparent and no evaluation has been presented so far. It is recommended to evaluate the new set of instruments according to international standards after they have been in use for three years.