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Our series “What’s Happening in Your State?” continues this month with the spotlight on Oregon!

How Can You Qualify For R&D Tax Credit in Oregon ?

As with most states, the qualification requirements closely mirror the federal definitions contained within Section 41 of the Internal Revenue Code, so long as the expenses are associated with activities occurring within Oregon.

Beginning January 1, 2024, only qualified expenses incurred by qualified semiconductor companies are eligible for the credit. The two qualified semiconductor companies are:

  • those involved in the production of semiconductors, including research, design, development, fabrication, assembly, testing, packing, and validation;
  • those creating manufacturing equipment, core intellectual property, and electronic design automation software.

The state R&D credit is equal to 15% of the qualified research expenses in Oregon in a taxable year exceeding the base amount.

To claim the credit, taxpayers must first obtain certification from the Oregon Business Development Department before filing their tax returns. This certification ensures the qualifying research activities meet the necessary criteria for the R&D credit.

The credit can be used to offset Oregon net personal income and corporate excise tax liability after all other credits are applied.  Any unused credit can be carried forward for up to 5 years. The limit is $4MM per taxpayer.

Interested in learning more about how your company may be able to take advantage of the federal and Oregon R&D credit? Please book a meeting with our experts here.