Wisconsin R&D Tax Credits
The Wisconsin Research Tax Credits (R&D tax credits) provide an incentive to increase qualified research activities and facilities within the state of Wisconsin. The R&D credits are nonrefundable and can be used to offset Wisconsin franchise or income taxes during the current year or carried forward for 15 years. The credits are only available to corporations with the exception of the facilities credit as described below.
Research (R&D) Credit Calculation:
The state of Wisconsin provides two methods for calculating the research credit. The Regular Credit is equal to 5% of the difference between the qualified research expenses incurred for research within the state of Wisconsin over a base amount.
- The base amount is calculated by multiplying the average annual gross receipts by the Wisconsin fixed base percentage, which cannot exceed 16%.
- The credit is increased to 10% for expenses related to internal combustion engines and any energy efficient products.
A company can also elect the Alternative Incremental Credit. This method provides an incremental system based on varying percentages and prior years’ gross receipts.
The R&D Facilities tax credit is equal to 5% of the qualified facilities expenses which include, constructing, expanding, or building new facilities. This includes the purchase of tangible depreciable property. The R&D facilities credit expires at the end of 2013.
Starting in 2013 R&D and the facilities credit may be claimed by individuals who are owners of flow through entities such as s-corporations, partnerships, and limited liability companies. Due to the fact that the R&D facilities credit expires at the end of 2013, the use of the credit for individuals will only be applicable for tax year 2013.
Super R&D Credit:
If current year qualified research expenses are greater than 125% of the average qualified research expenses claimed in the past three years, the increment is the amount of the Super R&D credit. The credit is non-refundable and can be claimed in the current tax year and carried forward for five years. The credit cannot be used to offset the economic development surcharge. The Super R&