A majority of states offer an R&D tax credit. State R&D tax credits can be taken in conjunction with or independently from the federal R&D tax credit. Each state has a different set of requirements and filing deadlines, but our team has an expertise in all states and will help your company maximize your R&D credits in all applicable states.
State R&D Credits
Alabama R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Alaska R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Arizona R&D Tax Credit
Qualified research expenses (“QREs”) occurring in Arizona for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The amount of the credit is based on the federal regular credit methodology for Arizona QREs. Taxpayers cannot use the federal Alternative Simplified Method. There are two types of R&D credits in Arizona: non-refundable and refundable. If the current year’s credit exceeds tax liability and taxpayer did not elect to receive a refund of 75% of the excess, the credit may be carried forward for 15 years. To be eligible for the refundable credit, the taxpayer must have less than 150 employees and apply to the Arizona Commerce Authority and receive a Certificate of Qualification.
Calculation – Non-refundable credit: If Current year QREs – Base amount = $2.5 million or less, then the credit is equal to 24% of that amount. If Current year QREs – Base amount exceed $2.5 million, then the allowable credit is $600,000 + 15% of the amount of expenses over $2.5 million. If a taxpayer has less than 150 employees, it may elect to receive 75% of excess credit refunded and waive the remaining 25% instead of carrying all excess credit forward.
- R&D Tax Credit Available? Yes
- Application Due Date – Due with Arizona Tax Return
- Does it apply to all entity types? Yes. An S corporation may claim the credit against income taxed at the corporate level, or it may make an irrevocable election to pass the credit through to its shareholders. A partnership must pass the credit to its partners.
Arkansas R&D Tax Credit
Arkansas offers several different types of research related tax credits. Below is a brief overview of a few of the available credits.
In-house Research in Area of Strategic Value Income Tax Credit – If an Arkansas taxpayer invests in in-house research in an area of strategic value or a project under the research and development programs offered by the Arkansas Science and Technology Authority and approved by its Board of Directors, it is eligible for an income tax credit equal to 33% of its qualified research expenses. The credit may be earned for the first 5 years following the signing of a financial incentive agreement and the maximum amount of the credit is $50,000 per year. The credit can be carried forward 9 years.
In-House Research by Targeted Business Income Tax Credit – To qualify as an eligible business for this credit, a taxpayer must fit within the six business sectors classified as “targeted businesses” and it must enter into a financial incentive agreement for income tax credits. An eligible business may be approved for a tax credit each year equal to 33% of the qualified research expenses incurred each year for the first five years of the financial incentive agreement. These credits may be sold. Any unused credits may be carried forward 9 years.
In-House Research Income Tax Credit – New or existing eligible businesses that conduct in-house research in a research facility operated by the business and that qualify for federal R&D credits may qualify for a tax credit equal to 20% of the eligible expenses. The credit may be used to offset 100% of an eligible business’s annual income tax liability. Unused credits may be carried forward for 9 years.
Research and Development with Universities Tax Credit – If a business contracts with one or more Arkansas colleges or universities in performing research, the business may qualify for a 33% income tax credit for qualified research expenses. The credit may be carried forward for 9 years. The credit can be used to offset up to 100% of the net tax due after all other credits. To qualify, the business must submit an application and project plan to the Arkansas Economic Development Commission.
- R&D Tax Credit Available? Yes – there are 4 types of R&D credits in Arkansas.
- Application Due Date See below
- Does it apply to all entity types? Yes
California R&D Tax Credit
Qualified research expenses occurring in California for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit can be carried forward indefinitely. There is no carryback.
Calculation – If the taxpayer is using the regular base methodology, the credit is 15% of the excess of the qualified research expenses for the taxable year over the base period research expenses. If the taxpayer elects to use the Alternative Incremental Research Credit methodology, the base amount is computed using a smaller three-tired fixed-base percentage and a reduced three-tiered credit rate (1.49%, 1.98%, and 2.48%).
- R&D Tax Credit Available? – Yes
- Statute of Limitations – Generally four years from the original due date of the return, or one year from the date of the overpayment, whichever period expires letter.
- Does it apply to all entity types? – Yes. The credit can be used to offset the qualified taxpayer’s income or franchise tax.
Colorado R&D Tax Credit
To claim the credit, a business must pre-certify with their local Enterprise Zone (“EZ”) Administrator by filing form DR 0074. Pre-certified taxpayers must complete a certification application and receive approval from the local EZ Administrator. Once a company has gone through the pre-certification process, a company performing R&D activities in an Enterprise Zone can claim the Enterprise Zone Research and Development Tax Credit. Once the credit is calculated, it is divided evenly over four tax years. If a company is unable to use the credit in a given year, the business may carry forward the remaining amount to subsequent tax years. There is no limit on the number of years a business may carry forward the credit.
Calculation – 3% of the amount by which a taxpayer’s research and experimental expenses in an enterprise zone exceed the average of the taxpayer’s research and experimental expenses in the same enterprise zone over the two preceding tax years.
- R&D Tax Credit Available? – Yes
- Application Due Date – Credits must be claimed on the return filed for the tax year in which the taxpayer earned the credit.
- Does it apply to all entity types? – Yes. The credit can be used to offset the qualified taxpayer’s income or franchise tax.
Connecticut R&D Tax Credit
Qualified research expenses occurring in Connecticut for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. There are two types of credits: Incremental and Non-incremental. The Incremental R&D Credit can be carried forward 15 years and is partially refundable for a small business with no tax liability and whose gross income for the previous year does not exceed $70 million. The non-incremental credit can be carried forward indefinitely and is partially refundable for a small business with no tax liability and whose gross income for the previous year does not exceed $70 million
Calculation – The incremental R&D Credit is equal to 20% of the incremental increase in Connecticut R&D expenses. The non-incremental credit is equal to up to 6% of the current year’s Connecticut R&D expenses and is dependent on the amount of spend on R&D expenses in a given year.
- R&D Tax Credit Available? Yes
- Application Due Date – Due with Connecticut Tax Return
- Does it apply to all entity types? – No. Only C Corporations are eligible and the credit may be applied against the tax imposed under Chapter 208 (Corporation Business Tax).
Delaware R&D Tax Credit
Qualified research expenses occurring in Delaware for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The eligible taxpayer must submit an application by September 15 after the end of the taxable year during which the R&D expenses were incurred. Once approved, the taxpayer must update Delaware Forms 700 and 2071AC. If a taxpayer cannot use the entire amount of the approved R&D credit, such unused credit is refundable.
Calculation – There are two calculation options in Delaware: 1) 10% (20% for a small business) of the excess of the taxpayer’s total Delaware qualified R&D expenses for the taxable year over the taxpayers Delaware base amount; or (2) 50% (100% for a small business) of Delaware’s apportioned share of taxpayer’s federal R&D credit calculated using the Alternative Simplified Credit method.
- R&D Tax Credit Available? Yes
- Application Due Date – Eligible taxpayers must submit an application by September 15 after the end of the taxable year during which the R&D expenses were made.
- Does it apply to all entity types? Yes, C-corporations, S-Corporations, and Partnerships are all eligible. The credit shall be applied against the taxpayer’s qualified tax liability. In the case of partnerships, the credit shall be allocated among the partners.
Florida R&D Tax Credit
Qualified research expenses occurring in Florida for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit can be carried forward up to 5 years.
To be eligible, the taxpayer must apply for and receive a certification letter from the Department of Economic Opportunity. Additionally, the taxpayer must be in one of the following targeted industries: manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology.
Calculation – 10% of the excess of the current year qualified research expenses over the base amount. The maximum tax credit for a business that has not been in existence for at least 4 taxable years is reduced by 25% for each taxable year for which the business, or predecessor corporation, did not exist.
- R&D Tax Credit Available? Yes
- Application Due Date – There is a one-week application period that begins on March 20th and ends on March 26th.
- Does it apply to all entity types? Only C-corporations are eligible. The credit cannot exceed 50% of the taxpayer’s remaining net income tax liability after all other credits have been applied.
Georgia R&D Tax Credit
Qualified research expenses occurring in Georgia for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit can be carried forward up to 10 years, or the excess R&D tax credits can be used against state payroll withholding.
Calculation – 10% of the qualified research expenses in Georgia in a taxable year exceeding the base amount.
- R&D Tax Credit Available? Yes
- Application Due Date – Due with the Georgia tax return.
- Does it apply to all entity types? Yes. The credit can be used to offset up to 50% of net Georgia income tax liability after all other credits have been applied. For pass-through entities, the tax credit is first applied at the entity level, and is then apportioned to shareholders or partners.
Hawaii R&D Tax Credit
Qualified research expenses occurring in Hawaii for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Only qualified high technology businesses (businesses that conduct more than 50% of their activities in qualified research) can capture a credit. If a tax credit claimed by a taxpayer exceeds the amount of income tax payment due from the taxpayer, the excess of the tax credit shall be refunded to the taxpayer. The federal credit must be claimed to apply for the Hawaii credit.
Calculation – The credit is equal to 20% of the total current year qualified research expenses occurring in Hawaii.
- R&D Tax Credit Available? Yes
- Application Due Date The application period for the Hawaii Tax Credit for Research Activities is March 1 through March 31. The maximum credit available per year is $5 million and certifications are provided on a first come, first-served basis until the cap is reached. The credit will be repealed on December 31, 2024.
- Does it apply to all entity types? Yes. The credit can be used to offset corporate or personal income tax.
Idaho R&D Tax Credit
Qualified research expenses occurring in Idaho for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The regular base methodology included in Section 41 of the Internal Revenue Code must be used in the calculation of the Idaho credit, but only Idaho expenses should be used in the calculation. The credit can be carried forward up to 14 years.
Calculation – The credit is equal to 5% of the amount that a taxpayer’s current year R&D expenses exceed the base amount.
- R&D Tax Credit Available? Yes
- Statute of Limitations Three years from the due date of the return or the date you filed the return, whichever is later.
- Does it apply to all entity types? Yes. A corporation must claim the credit to the extent allowable against its Idaho income tax before it can share the credit with shareholders or partners.
Illinois R&D Tax Credit
Qualified research expenses occurring in Illinois for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit can be carried forward 5 years.
Calculation – The credit is equal to 6.5% of the excess of the qualifying Illinois expenses over the base amount.
- R&D Tax Credit Available? Yes
- Statute of Limitations – Three years after the date your original return was filed or one year after the date your Illinois tax was paid, whichever is later.
- Does it apply to all entity types? Yes. Partners and shareholders are allowed a credit in accordance with the determination of income and distributive share of income.
Indiana R&D Tax Credit
Qualified research expenses occurring in Indiana for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit can be carried forward 10 years.
Calculation – There are two methods for calculating the Indiana R&D Credit. The regular method calculation is equal to the taxpayer’s qualified research expense for the taxable year, minus the base period amount up to $1 million, multiplied by 15%. A credit percentage of up to 10% is applied to any excess of Indiana qualified research expense over a base amount greater than $1 million. The alternative simplified credit calculation is equal to 10% of the current year Indiana expenses minus 50% of the average Indiana expenses for the three previous years. If the taxpayer does not have expenses during any of the three previous years, the credit is equal to 5% of the current year’s Indiana expenses.
- R&D Tax Credit Available? Yes
- Statute of Limitations – Three years after the date your original return was filed or one year after the date your Illinois tax was paid, whichever is later.
- Does it apply to all entity types? Yes
Iowa R&D Tax Credit
Qualified research expenses occurring in Iowa for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code.
Calculation – Iowa offers two methods of calculating the R&D Credit: 1) the regular credit and 2) the alternative simplified credit. The regular credit is 6.5% of qualifying research expenditures that exceed the base amount or 50% of qualifying research expenditures, whichever is lower. Iowa’s alternative simplified credit is 4.55% of the difference between the current year qualifying expenses and 50% of the average amount of qualifying expenses for the prior 3 years.
- R&D Tax Credit Available? – Yes
- Statute of Limitations – 3 years from the due date of the return or the date the return was filed, whichever is later.
- Does it apply to all entity types? – Yes. The credit can be used to offset the taxpayer’s income tax liability. Any research credit in excess of the tax liability may be refunded to the taxpayer or credited for the following year.
Kansas R&D Tax Credit
In general, qualified research expenses occurring in Kansas for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Utilization of the Kansas R&D credit is limited to 25% of the credit plus any carry forward. Any remaining unused credit may be carried forward in 25% increments until the total amount of credit is used.
Calculation – The credit is equal to 6.5% of the difference between the qualified research expenses in the claiming tax year and the average of the expenditures made during the tax year and the two previous tax years.
- R&D Tax Credit Available? Yes
- Statute of Limitations – Three years from the date the return was due, the date of filing, or the date the tax is paid, whichever is later.
- Does it apply to all entity types? No. Credit is only available to corporations subject to Kansas income tax (C-Corporations). The credit is not available to pass through entities.
Kentucky R&D Tax Credit
Taxpayers may receive a credit to recover a portion of their construction costs for facilities that pursue research as defined in Section 41 of the Internal Revenue Code. “Construction costs” include constructing, remodeling, and equipping facilities in KY or expanding existing facilities in the state for qualified research. It includes only tangible, depreciable property and does not include any amounts paid or incurred for replacement property. Any unused credit may be carried forward 10 years.
Calculation The credit is equal to 5% of the qualified costs of construction of research facilities that may be applied against individual or corporation income tax.
- R&D Tax Credit Available? Yes. Businesses that invest in facilities used to pursue research may qualify for a state income tax credit.
- Application Due Date The application is due with the income tax return to determine the credit against the tax liability allowed for the completion of construction of research facilities.
Louisiana R&D Tax Credit
In general, qualified research expenses occurring in Louisiana for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Professional services firms or custom manufacturers or custom fabricators that do not have a patent or a patent pending are not eligible. Credits in excess of the tax liability is refundable for credits claimed on an original return and has a carry forward of 5 years.
Calculation The various credit calculations are listed below:
- Business employs 100+ persons (including affiliates): Credit is equal to 5% of the difference between the in-state research expenses for the taxable year minus the base amount;
- Business employs 50-99 persons (including affiliates): Credit is equal to 10% of the difference between the instate research expenses for the taxable year minus the base amount;
- Business employs <50 persons (including affiliates): Credit is equal to 30% of the difference between the in-state research expenses for the taxable year minus the base amount; or
- 30% of the small business innovation research grant award or small business technology transfer program funding received during the tax year.
- R&D Tax Credit Available? Yes
- Application Due Date Credits must claim expenditures within one year after December 31 of the year in which the expenditure was incurred.
- Does it apply to all entity types? Yes
Maine R&D Tax Credit
In general, qualified research expenses occurring in Maine for qualified activities are capturable for specialized industries. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit cannot be carried back but can be carried forward 15 years.
Calculation – The credit is based on a percentage of the federal Credit for Increasing Research Activities. The credit is equal to 5% of the excess qualified research expenses over the previous three-year average, plus 7.5% of the basic research payments under IRC § 41(e)(1)(A). The credit can be used to offset 100% of the first $25,000 in tax liability plus 75% of the tax liability greater than $25,000.
- R&D Tax Credit Available? Yes
- Statute of Limitations – Within 3 years from the date the return was filed, regardless of whether the return was timely filed, or 3 years from the date the tax was paid, whichever period expires later.
- Does it apply to all entity types? Yes
Maryland R&D Tax Credit
In general, qualified research expenses occurring in Maryland for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. If the taxpayer’s assets are less than $5 million, the tax credits are refundable. The awarded tax credit will be prorated if the credits applied for by non-small businesses exceeds $8.5 million and/or if the total amount of credits applied for by small businesses exceeds $3.5 million.
Calculation The credit is equal to 10% of eligible R&D expenses incurred during the taxable year in excess of the Maryland Base Amount.
- R&D Tax Credit Available? Yes
- Application Due Date November 15
- Does it apply to all entity types? Yes
Massachusetts R&D Tax Credit
Qualified research expenses occurring in Massachusetts for qualified activity are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code.
Calculation – For tax years 2018-2020, the credit is equal to 7.5% of the excess of the qualified research expenses for the current year over the base amount. For 2021 and beyond, the tax credit is equal to 10% of the excess of the qualified research expenses for the current year over the base amount
- R&D Tax Credit Available? – Yes
- Statute of Limitations – 3 years from the due date of the return or the date the return was filed, whichever is later.
- Does it apply to all entity types? – Yes. However, flow-through entities must apply it to their corporate excise tax under MGL Chapter 63. Pass through of this credit to shareholders or partners is not permitted.
Michigan R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Minnesota R&D Tax Credit
Qualified research expenses occurring in Minnesota for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code.
A company can only use the credit to offset the regular franchise tax or the liability for tax, whichever is less. If the tax credit exceeds the regular franchise tax/liability for tax, the excess must be used by other members if possible. Credits allocated to other members are limited to the regular franchise tax or the liability for tax for each member, whichever is less. If no combined group member is able to use the credit earned in the tax year it is generated, the earning member may carry over any unused amount up to 15 future years until none remains.
Calculation – The credit amount is equal to 10% of qualified research expenses up to a computed base amount of $2,000,000 and 4% for qualified research expenses above that level. The credit cannot exceed 50 percent of the business’s research expenditures.
- R&D Tax Credit Available? – Yes
- Statute of Limitations – 3.5 years from the original due date for the year the taxpayer is amending
- Does it apply to all entity types? – Yes. The credit can be used to offset the qualified taxpayer’s corporate franchise tax or individual income tax (if pass-through entity).
Mississipi R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Missouri R&D Tax Credit
For the first time since 2004, Missouri is now offering an R&D tax credit!
Starting with tax years beginning after January 1, 2023, qualified research expenses (“QREs”) occurring in Missouri are capturable and the qualification requirements closely mirror the federal definitions contained within Section 41 of the Internal Revenue Code. If the tax credit exceeds a taxpayer’s liability, the credit can be carried forward up to 12 years. Additionally, 100% of the credit may be transferred, sold, or assigned so long as certain requirements are followed.
Calculation – The credit is equal to 15% of a taxpayers “additional qualified research expenses.” The credit is increased to 20% if such expenses relate to research conducted in conjunction with a public or private Missouri college or university. “Additional qualified research expenses” is defined as the difference between QREs incurred in a tax year subtracted by the average taxpayers QREs for the three prior years. The credit may not exceed 200% of its average QREs during the three prior years. The credit is capped at $300,000 per taxpayer and the aggregate of tax credits in Missouri shall not exceed $10 million in any year, with $5 million reserved for minority-owned, women-owned, and small businesses.
- R&D Tax Credit Available? – Yes
- Statute of Limitations – Credit begins with tax years starting in 2023. Cannot claim a credit prior to that date.
- Does it apply to all entity types? – Yes. The credit can be used to offset the qualified taxpayer’s corporate income tax or financial institution tax.
Montana R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Nebraska R&D Tax Credit
In general, qualified research expenses occurring in Nebraska for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 174 of the Internal Revenue Code. The tax credit is allowed for the first tax year it is claimed, and may be claimed for the following 20 tax years if the business firm continues to earn the federal credit. If the credit is claimed for expenses on the campus of or at a facility of a college or university, the credit can be claimed for the first year and for the following four years.
Calculation The credit is equal to 15% of the federal tax credit allowed for Nebraska expenses. If the business makes expenditures on the campus of a college or university in NE, or at a facility in NE owned by a college or university, the credit is equal to 35% of the federal credit.
- R&D Tax Credit Available? Yes
- Application Due Date The credit must be claimed via an application to be filed with the state income tax return.
- Does it apply to all entity types? Yes. The credit can be used to offset sales and use tax or as a refundable income tax credit.
Nevada R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
New Hampshire R&D Tax Credit
Qualified manufacturing research and development expenditures made for wage expenses occurring in NH are capturable towards the credit. Qualification requirements closely follow the federal definition of wages contained within Section 41 of the Internal Revenue Code. Wages for which a credit is taken shall not also be eligible under the ERZTC. The credit can be carried forward up to 5 years.
Calculation The credit is equal to 10% of the excess of qualified R&D expenses for the taxable year over the base amount but cannot exceed $50,000.
- R&D Tax Credit Available? Yes
Application Due Date The application is due by June 30 following the tax year during which the R&D occurred.
Does it apply to all entity types? Yes. The credit is first applied against the business profits tax, and any remaining amount may be applied against the business enterprise tax
New Jersey R&D Tax Credit
Qualified research expenses occurring in New Jersey for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit can be carried forward for 7 years in most instances, or 15 years if certain parameters are met.
Calculation – The credit is equal to 10% of the excess of qualified research expenditures over the base amount, plus 10% of basic research payments. The base amount must follow the same method used for the federal calculation (Regular Credit Method or Alternative Simplified Credit Method).
- R&D Tax Credit Available? – Yes
- Statute of Limitations – 3 years after the return is filed or two years after the tax is paid, whichever is later.
- Does it apply to all entity types? – C corporations and S corporations are eligible. Pass through of this credit to shareholders is not permitted.
New Mexico R&D Tax Credit
The credit is available to a business with 50 employees or less and qualified expenses less than or equal to $5 million. Qualified expenses means any expense or allocated portion of an expense connected to qualified research at a qualified facility, including depletable land and rent paid or incurred for land improvements, allowable amounts paid or incurred to operate or maintain a facility, buildings, equipment, computer software, computer software upgrades, consultants and contractors performing work in NM, payroll, technical books and manuals, and test materials. Any unused credit can be carried forward up to three years from the date of the original claim.
Calculation The basic credit is equal to 5% of qualified expenses. There is an additional 5% available for taxpayers that raise their in-state payroll by $75,000 for every $1 million in qualified expenses.
- R&D Tax Credit Available? Yes
- Application Due Date Taxpayer may apply for approval of a basic or additional credit within one year following the end of the tax year in which the qualifying expenses were made.
- Does it apply to all entity types? Yes. The credit can be used to offset the taxpayers income tax or corporate income tax due.
New York R&D Tax Credit
In general, qualified research expenses occurring in New York for qualified activities are capturable towards the credit, so long as the taxpayer is a participant in the Excelsior Jobs program. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit is refundable and may only be claimed by eligible businesses over a 10 year period.
Calculation The credit is capped at 3% of qualified research expenses conducted in New York.
- R&D Tax Credit Available? Yes
- Application Due Date The credit must be claimed on a timely filed return.
- Does it apply to all entity types? To claim the credit, the taxpayer must be a participant in the Excelsior Jobs program and subject to tax under Articles 9-A, 22, or 33.
New Carolina R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
North Dakota R&D Tax Credit
In general, qualified research expenses occurring in New Dakota for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit must be carried back three years and carried forward up to fifteen tax years. Subject to certain conditions, a taxpayer may sell, transfer, or assign up to $100,000 of its unused tax credit.
Calculation Starting in 2019, a taxpayer may elect to use the regular credit or the alternative simplified (ASC) credit methodology. The regular credit is equal to 25% of the first $100,000 of excess of qualified research expenses in ND over the base amount in ND. For excess over $100,000, the applicable percentage is 8%. The ASC credit is equal to 17.5% of the first $100,000 of excess of qualified research expenses in ND over the base amount in ND. For excess over $100,000, the applicable percentage is 5.6%.
- R&D Tax Credit Available? Yes
- Application Due Date The credit must be claimed via an application to be filed with the state income tax return.
- Does it apply to all entity types? Yes. An individual, estate, trust, partnership, corporation, or limited liability company is allowed an income tax credit for conducting research in North Dakota.
Ohio R&D Tax Credit
Invested qualified research expenses occurring in Ohio for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any excess credit not used for the taxable year in which it is earned may be carried forward for up to 7 years.
Calculation – The credit equals 7% of the amount of QREs in excess of the taxpayer’s average investment in Qualifying Research Expenses over the 3 preceding taxable years.
- R&D Tax Credit Available? Yes
- Statute of Limitations – The deadline to file an amended return and refund claim in Ohio is four years from the date the return was filed or required to be filed, whichever is later
- Does it apply to all entity types? Yes. The credit is nonrefundable and used to offset the Commercial Activity Tax (“CAT”).
Oklahoma R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Oregon R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Pennsylvania R&D Tax Credit
Qualified research expenses occurring in Pennsylvania for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit can be carried forward for 15 years.
Calculation – The credit is equal to 10% of total Pennsylvania qualified expenditures (20% for “small businesses”) over the average qualified expenses from the 4 prior years.
- R&D Tax Credit Available? – Yes
- Application Due Date – December 1
- Does it apply to all entity types? – Yes. The tax credit must first be applied to the entity’s corporate tax liability, if any, for the year in which the tax credit was awarded before it can be passed through to its partners, shareholders or members. The tax credit can also be sold or assigned.
Rhode Island R&D Tax Credit
In general, qualified research expenses occurring in Rhode Island for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit is applied to 50% of the tax due after all other credits have been used. Any unused credit can be carried forward 7 years.
Calculation The credit is equal to 22.5% of the excess of the qualifying research expenses in the taxable year over the base period expenses up to $111,111 and 16.9% for the remaining QREs.
- R&D Tax Credit Available? Yes
- Application Due Date The credit must be claimed via an application to be filed with the state income tax return.
- Does it apply to all entity types? Yes. The credit is available to corporations, sole proprietors, or passed through from partnerships, joint ventures or subchapter S corporations for qualified research expenses.
South Carolina R&D Tax Credit
In general, qualified research expenses occurring in South Carolina for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The credit cannot exceed 50% of a taxpayer’s liability and the credit can be carried forward 10 years.
Calculation The credit is equal to 5% of the qualified research expenses that occurred in South Carolina in a given tax year.
- R&D Tax Credit Available? Yes
- Statute of Limitations Three years from the date the return was due, the date of filing, or the date the tax is paid, whichever is later.
- Does it apply to all entity types? Yes.
South Dakota R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Tennessee R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Texas R&D Tax Credit
In general, qualified research expenses occurring in Texas for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The allowable Franchise Tax Credit in any one period, including carryforward amounts, cannot exceed 50% of the franchise tax due for the period. Unused credits can be carried forward up to 20 years.
Calculation The credit is equal to 5% of the excess amount of qualified research expenses in the current period over the base amount.
- R&D Tax Credit Available? Yes
- Statute of Limitations A claim for refund must be made within 4 years from the date on which the tax was due and payable.
- Does it apply to all entity types? Yes. The credit can be used to offset a portion of their franchise tax.
Utah R&D Tax Credit
Qualified research expenses occurring in Utah for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. The Incremental credit may be carried forward up to 15 years, but the Flat credit cannot be carried forward.
Calculation – Utah provides two types of state tax credits – an incremental credit and a flat credit. For the incremental credit, the credit is equal to 5% of qualified expenses over a base amount. For the flat credit, the credit is 7.5% of qualified expenses.
- R&D Tax Credit Available? – Yes
- Statute of Limitations – 3 years after the return is filed.
- Does it apply to all entity types? – Yes. The credit can be claimed against individual or corporation income tax.
Vermont R&D Tax Credit
In general, qualified research expenses occurring in Vermont for qualified activities are capturable towards the credit. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Any unused credit can be carried forward up to 10 years.
Calculation The credit is equal to 27% of the federal tax credit in the taxable year attributed to Vermont activities.
- R&D Tax Credit Available? Yes
- Statute of Limitations Three years from the date the return was due, the date of filing, or the date the tax is paid, whichever is later.
- Does it apply to all entity types? Yes, so long as the entity also claimed the Federal R&D credit. The credit can be applied to personal income tax or business/corporate income tax.
Virginia R&D Tax Credit
Qualified research expenses occurring in Virginia for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code. Virginia provides two types of state tax credits: the Refundable R&D Credit and the Major R&D Credit. The applicable type is determined by evaluating the amount of qualified expenses in a given year. The Major R&D Credit can be carried forward 10 years.
Calculation – The Refundable R&D credit calculation is equal to 15% of the first $300,000 in qualified expenses over a base amount with a limit of $45,000. The Major R&D credit calculation is equal to 10% of the difference between the current years qualifying expenses and 50% of the average amount of qualifying expenses for the prior 3 years.
- R&D Tax Credit Available? – Yes
- Application Due Date – September 1
- Does it apply to all entity types? – Yes. The credit can be claimed against individual income tax, corporation income tax, and bank franchise tax.
Washington R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Washington, D.C R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
West Virginia R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.
Wisconsin R&D Tax Credit
Qualified research expenses occurring in Wisconsin for qualified activities are capturable. Qualification requirements closely follow the federal definitions contained within Section 41 of the Internal Revenue Code.
Calculation – The credit is equal to 5.75% of the amount by which taxpayer’s qualified research expenses for the taxable year exceed 50% of the average qualified research expenses for the 3 taxable years directly preceding the current year the credit is claimed. If the taxpayer had no qualified research expenses in any of the 3 prior tax years, the taxpayer may claim 2.875% of the qualified research expenses.
- R&D Tax Credit Available? Yes
- Statute of Limitations – 4 years from the due date of the return or the date filed, whichever is later.
- Does it apply to all entity types? Yes
Wyoming R&D Tax Credit
R&D Tax Credit Available? No, but there are several other state-based credits for which companies can apply.