• + people +
  • innovation +
  • results

State Research & Development Tax Credits

State Research & Development Tax Credits

State Research & Development Tax Credits

The Federal Research & Development (R&D) Tax Credit can have a major impact on your federal tax liability. However, in addition to saving tax dollars on the federal level, several states provide their own R&D credit to help offset state tax liability and increase investment. Combined, these state and federal credits can significantly reduce the cost of doing business. To capture a state R&D credit, a company must be performing the qualified activities in that state; physical presence alone is not enough.  Note that effective tax planning and utilization of state level R&D credits requires specific knowledge of the nuances of each specific state’s rules and tax regulations.  Some state R&D information is below:

California

  • The credit is permanent.
  • You have the option to offset either income tax or franchise tax.
  • The credit can be carried forward indefinitely to apply to future tax years but cannot be carried back.

Ohio

  • The credit can be carried forward 7 years.
  • The credit is claimed on Form CAT CS (Commercial Activity Tax Credit Report).
  • The credit is non-refundable against Commercial Activity Tax (CAT).

Pennsylvania

  • The credit can be carried forward up to 15 years and is refundable.
  • Credits can be purchased or assigned to other companies. The purchaser or assignee must use the credit in the taxable year it is purchased.

Texas

  • The credit can be carried forward up to 20 years.
  • The credit cannot exceed 50% of the franchise tax.

Virginia

  • The credit can be carried forward up to 20 years.
  • The due date for filing for the credit changed from April 1 to July 1.
  • The cap was recently increased to $7 million for 2016.

State R&D credits offer meaningful value to help offset the cost of investment in your business.  However, a one size fits all approach to R&D credits could lead to significant missed opportunities, especially if not tied to company business objectives, and state specific tax liability and strategy. For more information about state level R&D credits and to see if your company can benefit, please contact HIREtech at 844.HIREtec or This email address is being protected from spambots. You need JavaScript enabled to view it.

Hot Topics

Interested in learning more?

Hot Topics