While large companies typically invest parts of their budgets in research and development (R&D) as a matter of course, the majority of German small and medium-sized enterprises (SMEs) are significantly more hesitant. The costs are too high, and the future returns generated by R&D are too uncertain. In most EU member states, tax incentives for R&D are already helping to unlock these urgently needed innovation potentials. The author advocates for the introduction of a tax incentive for R&D that is limited to benefiting SMEs in Germany and develops specific design options while considering European state aid law.