State R&D Tax Credits

Increase Cash Flow by As Much As 40% in Some States

In addition to the federal R&D tax credit, many states offer a credit for expenditures to attempt to develop or improve a product, process or software, and most adopt or follow rules similar to those of the federal R&D credit.

Some states require taxpayers to file an application other than just the tax return on which the credit is claimed to be eligible for their credits. Some also limit their credit to certain industries or the amount of credits that will be allowed each year.

In many cases, though, state credits are even more generous than the federal credit. Some states have higher credits rates, allow taxpayers to sell or transfer their credits to other taxpayers, or may pay taxpayers the value of their state credits even if the taxpayers aren’t currently paying taxes (refundable credits).

Click on a state in the map below or scroll through the list to see state credit rates, whether the credit is refundable/saleable and how long unused credits may be carried forward, as well as any special considerations.