State R&D Tax Benefits

Currently, 36 states provide for an R&D tax credit and a number of states offer targeted incentives on R&D spend in specific fields or in particular zones (i.e., enterprise zones) or for other specific attributes (small companies, start-ups).

These states generally follow the federal regulations and IRS guidance on what constitutes qualified research expenses (QREs) with the notable exception of states such as Connecticut which lowers the threshold to utilize the Section 174 research and experimental expenditures definition for QREs.

There are nuances in other state R&D incentive programs as well, such as California which generally follows the federal rules, but utilizes a different gross receipts calculation to include only sales of real, tangible, or intangible property held for sale to customers in the ordinary course of the taxpayer’s trade or business delivered or shipped to a purchaser within California, but does not include service-related receipts, rents or interest.

Below is a current summary of states offering R&D tax credits:

  • Arizona
  • Arkansas
  • California
  • Colorado (R&D within an enterprise zone)
  • Connecticut (Section 174 lower threshold for QREs)
  • Delaware
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Montana
  • Nebraska
  • New Jersey
  • New York (includes job creation credit and investment tax credits)
  • North Carolina
  • Ohio
  • Pennsylvania
  • South Carolina
  • Texas
  • Utah
  • Washington (B&O tax credit)
  • West Virginia
  • Wisconsin
  • Virginia

Contact us today to learn more about how we can assist in securing you R&D Tax Credits.