State Research & Development Tax Credits
Many states offer research tax credits as a means for promoting growth and development as well as creating new jobs. Below is the map for each state:
The definition of qualifying research activities in each state is based on the federal tax credit regulations; however, the tax credit computation and other factors vary significantly from state to state. For example:
- Some states provide for a refund or exchange of the credit so that even if a taxpayer has no tax ability it can still derive a cash benefit.
- The R&D statutes in some states have expiration provisions that differ from the federal statue while some states have permanently adopted the research credit to their tax code.
- Most states allow a credit only for the research activities performed in their home state, though some allow a credit for development work regardless of where it was conducted.
- Some states have either expanded or restricted the meaning of qualifying research activities in which expenses may be claimed.
- Most states do not currently offer an alternative simplified credit calculation such as the federal government.
- In some states, the research credit calculation includes basic research payments made to universities and non-profit organizations.
Contact us to learn more and if your company qualifies for federal and state research credits.