North Carolina

Credit Name: Research and Development Tax Credit (Article 3F)

Expiration Date: Tax years beginning on or after 1/1/2016

Does it apply to C corps and pass-through entities?: No restrictions to entity type

Credit Carry forward: Carry forward 15 years

Description: North Carolina separates out general research expenses from University research expenses and allows different credits for each: 1. Credit for qualified North Carolina research expenses: At the end of the tax year, if the Taxpayer had receipts of less than $1M, the credit is 3.25% of NC QREs. Research performed in a development tier one area is considered low tier research and is also 3.25% of QREs. Otherwise, the credit percentage is 1.25% of expenses between $0-$50M, 2.25% of expenses $50M-$200M, and 3.25% of expenses over $200M. 2. Credit for North Carolina university research expenses is 20%.

Other Notes: Tax payer can offset up to 50% of tax liability remaining after all other credits used with current year and carryforward credits. Taxpayer must elect to offset either franchise or income tax with the credit and the election is binding.