State R&D Tax Credits

State R&D Tax Credits


Credit Name: Texas Franchise Research and Development Credit

Expiration Date: 12/31/2009

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

Credit Carry forward: Carry Forward 20 years.

Description: The Texas R&D Credit expired at the end of 2009, so only taxpayers with fiscals years starting in 2009 are currently eligible for credit for the portion of QREs incurred in calendar year 2009. By the end of 2013, no Texas Taxpayers will be eligible to amend any returns for the R&D Credit.

3 Calculation Methods – QREs are defined according to the IRC §41. The credit equals 5% of the QREs that exceed a base amount. The base percentages and base amount are calculated in the same way as the federal except using only Texas QREs, Texas Revenue, and Start-up rules companies use a 3% base percentage. Taxpayers can also elect an Alternative Calculation Research Credit that mirrors the federal.

Taxpayers in a Strategic Investment Area (SIA) receive a bonus 100% of QREs for their credit.

Other Notes: The credit cannot offset more than 50% of the taxpayer’s tax liability.

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