Wisconsin Act 59, which was passed in 2017, allows for a portion of the Wisconsin R&D tax credit to be refundable. Effective for tax years beginning on or after January 1, 2018, the refundable portion is the lesser of 10% of the current year research credit OR the current year research credit remaining after subtracting the current year credit used to offset tax. Companies with no tax liability calculate the refundable portion as 10% of current year credit.
The refundable portion of the R&D credit allows Wisconsin companies which have historically not had tax liability to benefit from the state’s R&D tax credit provisions. The new refundable portion applies to any individual, partner of a partnership, shareholder of an S-corporation, member of a limited liability corporation, or corporation. Any portion of the Wisconsin R&D tax credit not used to offset tax or refunded may be carried forward for up to 15 years.