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California
R&D Tax Credits

Connect with us to find out how R&D tax credits can boost your organization’s bottom line.

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This post was last updated on Jul 16, 2025.

California R&D Tax Credit

Discover the benefits of California state credits and see how your business could qualify.

of qualified expenses that exceed a base amount

of the basic research payments

of the additional credits applied to the 1.5% S-Corp entity tax

N/A

carry forward for credit usage

Estimate the value of your CA R&D tax credits!

California R&D Tax Credit Eligibility Summary:

Is the R&D Tax Credit Available?:

Yes

Eligible Entities:

C-Corporations, S-Corporations, LLCs, Partnerships

Deadline for Tax Filing:

Due with California Tax Return

Data Required to Compute Credit:

Claim Period Qualified R&D Expenses (QREs)

What Information is needed?:

Gross Receipts for Prior 4 Years

California R&D Tax Credit Guidelines:

Taxpayers may elect the alternative incremental credit in which taxpayers are assigned a smaller three-tiered fixed-base percentage and a reduced three-tiered credit rate (1.49%, 1.98%, and 2.48%).
California offers an additional 1/3 of the credits to be applied to the 1.5% S-Corp entity tax.
Several states impose a dollar limit on the amount of expenses that can qualify for the research tax credit. Some states limit the amount of their research tax credits that taxpayers can claim in any one tax year. The California research tax credit does not have a dollar limitation.
California conforms to the federal IRC on a fixed-date basis, conforming to the code in effect on 1/1/2015; therefore, it does not conform with TCJA, which was enacted on 12/22/2017.

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California R&D Tax Credit Case Study

A California-based company recovered thousands in R&D tax credits to refuel growth.

$

231,000

Total state R&D tax credits earned

50 %

Amount of wages qualified for tax credits

$

588,000

Total R&D tax credit earned

Key California R&D Tax Credits R&D Tax Rules Changes

2019' - 22

22' and after

2019' - 22

22' and after

Resources

There are many other considerations and exemptions, including what documentation the IRS requires for the R&D tax credits. Stay updated to navigate the new tax laws with confidence.

Check California R&D Tax Credit Law

See How Section 174 Impacts You

Check Frequently Asked Questions

Get Pre-Qualified with R&D Credit Calculator

Prefer to speak with a specialist now?

Book a call with a Tax Credit Specialist

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Connect with us to find out how R&D Tax Credits can boost your organization’s performance.

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Frequent Asked Questions

What is the California R&D tax credit?

California offers a 15% credit on incremental QREs and 24% for basic research by nonprofits, aligning with federal guidelines (IRC § 41).

What activities qualify for California’s R&D tax credit?

Eligible activities include developing tech solutions or improving manufacturing processes conducted in California. Strike Tax identifies qualifying projects.

How much can my business save with California’s R&D tax credit?

For $1 million in incremental QREs, you could save $150,000, plus federal credits. Use Strike Tax’s R&D Credit Calculator for estimates.

Are California R&D tax credits refundable for small businesses?

Credits are non-refundable but carry forward indefinitely. Small businesses can use federal payroll tax offsets. Strike Tax maximizes benefits.

How do I apply for California’s R&D tax credit?

File Form FTB 3523 with your California tax return, ensuring federal compliance. Strike Tax simplifies documentation and filing.

Can California businesses claim both state and federal credits?

Yes, stacking state and federal credits maximizes savings for the same QREs. Strike Tax optimizes both claims.

Why is California’s R&D credit valuable for tech companies?

Tech firms benefit from high QREs and indefinite carryforward. Strike Tax tailors claims for tech businesses.

How does Strike Tax help California businesses?

Strike Tax ensures compliance, maximizes state and federal credits, and provides expert support for California R&D claims.

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California R&D Tax Credits

California R&D Tax Credit

Estimate the value of your CA R&D tax credits!

California R&D Tax Credit Eligibility Summary:

California R&D Tax Credit Guidelines:

California R&D Tax Credit Case Study

$

231,000

50

%

$

588,000

Key California R&D Tax Credits R&D Tax Rules Changes

Resources

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Static and dynamic content editing

How to customize formatting for each rich text

Ready to calculate your R&D tax credits?

California
R&D Tax Credits