State R&D Tax Credits


Credit Name: 830 CMR 63.38M.1: Massachusetts Research Credit

Expiration Date: None

Does it apply to C corps and pass-through entities?: Yes

Credit Carry forward: Carry forward: unlimited for credit limited by the $25,000 limitation and 15 years for credits above the taxpayer’s excise liability.

Description: Two Methods available, beginning in 2015: 1) Description: Calculation: the sum of the following amounts: • 10% of the excess MA QREs over the MA Base Amount • 15% of MA Basic Research payments The MA Base Amount (cannot be less than 50% of MA QREs) is the product of: • The MA fixed-base percentage • The average annual gross receipts of the corporation for the four taxable years proceeding the taxable year for which the credit is being determined The MA fixed-base percentage (cannot exceed 16%) is: • General Rule: ratio of aggregate MA QREs to MA GRs between December 31, 1983, and before January 1, 1989 • Start-up Rule (fewer than three taxable years beginning after December 31, 1983, and before January 1, 1989, in which the corporation had both QREs and GRs or if a corporation makes the election to use federal gross receipts): 3% • for inadequate records, the fixed base is 16% 2) Description: Alternative Simplified Credit, effective for years beginning on or after January 1, 2015 • Credit is 5% of the current year QREs over the base amount • Base amount is 50% of the average of the QREs over the prior three tax years • If no QREs in all three of the prior years, credit is 5% of the current year QREs

Other Notes: Limitations on the Credit: The amount of the credit, including any credit carried over from previous taxable years is limited to 100% of the corporation’s first $25,000 of corporate excise liability, plus 75% of the corporation’s corporate excise liability in excess of $25,000. Credit does not flow through to individual shareholders for S-corps and flow through entities. Carryforward must be used before current year credits.

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