Louisiana R&D Tax Credits

State and Federal Credits Available

30%

for businesses with 50 employees

10%

for 50-99 employees

for 100+ employees

5 Years

carryforward period

No Per-Taxpayer Cap

up to statewide aggregate limit

The Louisiana Research and Development Tax Credit, administered by the Louisiana Economic Development (LED), rewards businesses for conducting qualified research activities in the state, providing a nonrefundable offset against income or franchise tax liabilities. Beginning July 1, 2025, total R&D credits allowed each state fiscal year are capped at $12 million on a first-come, first-served basis, with priority filing for previously disallowed claims in the following year.

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30%

for businesses with 50 employees

10%

for 50-99 employees

for 100+ employees

5 Years

carryforward period

No Per-Taxpayer Cap

up to statewide aggregate limit

Key Highlights

Tiered rates based on Louisiana employee count for small business focus
Separate 30% credit for SBIR/STTR award recipients (transferable)
Applies to Louisiana-sourced QREs meeting federal IRC §41 standards
Certification required via LED online application with fee
Up to 30% of incremental QREs for eligible small firms, with no minimum spending threshold

Who Qualifies for the Louisiana R&D Tax Credit

Eligibility requires performing qualified research activities (QRAs) in Louisiana that align with federal guidelines under IRC §41, including the §174 requirement and the four-part test: technological in nature, intended to eliminate uncertainty, substantially experimental (80%+), and for a permitted purpose like developing or improving a business component. Only Louisiana-incurred expenses qualify, and the LED application must be submitted within one year after December 31 of the expenditure year.

Eligible Entities

C Corporation May claim both the regular and basic research credit
S Corporation Limited entity-level use; can pass credits to shareholders
Partnerships / LLCs Credits pass through to owners via Schedule K-1

Qualified Research Expenses (QREs)

How to Calculate the Louisiana R&D Tax Credit

Louisiana uses an incremental method based on employee count, applying a tiered percentage to excess QREs over a base derived from prior years' averages. Only Louisiana-sourced QREs qualify, using full-time equivalent Louisiana employees at year-end. No alternative simplified credit is available.

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Regular Method

Determine total Louisiana QREs for the current tax year.
Calculate the base amount:
For 50 employees: 50% of the average Louisiana QREs over the prior 3 years (or 0% if no prior QREs).
For 50+ employees: 80% of the average Louisiana QREs over the prior 3 years (or 0% if no prior QREs).
Compute excess QREs = current QREs - base amount.
Apply the tiered rate to the excess:
50 employees: 30%
50-99 employees: 10%
100+ employees: 5%
For SBIR/STTR recipients: Separate 30% credit equal to 30% of the qualifying Phase I or II award amount received that year (taxpayers must submit grant details for certification).

Example Calculation

A startup with 40 Louisiana employees incurs $1,000,000 in QREs in 2025, with prior 3-year average QREs of $400,000.

Base = 50% × $400,000 = $200,000

Excess = $1,000,000 - $200,000 = $800,000

Credit = 30% × $800,000 = $240,000

If the same firm receives a $100,000 SBIR Phase II award: Additional credit = 30% × $100,000 =

$30,000 (transferable).

Base Calculation for Louisiana R&D Tax Credit

Identify total Louisiana QREs for the prior 3 tax years (use available years if fewer than 3).
Compute average = sum of prior QREs / number of years.
Apply base percentage: 50% of average for 50 employees; 80% of average for 50+ employees (if no prior QREs, base = $0).
Ensure Louisiana-sourced only; exclude out-of-state expenses.

Example Calculation

Prior Year -1 QREs = $500K;

Year -2 = $300K;

Year -3 = $200K;

→ Average = ($500K + $300K + $200K) / 3 = $333K

For 50 employees: Base = 50% × $333K = $166.5K

For 50+ employees: Base = 80% × $333K =$266.4K

If no prior:→ Base =$0 (full current QREs qualify as excess)

Estimate Your Credits

Louisiana-Specific Rules

Louisiana's R&D credit emphasizes small businesses through employee tiers and requires pre-claim safeguards, setting it apart from federal uniformity.

High Small Business Rate

3Firms with fewer than 50 Louisiana employees qualify for 30% on excess QREs, with a lower 50% base to support early innovation in energy and biotech.

Transferable SBIR/STTR Credits

Only the separate 30% SBIR/STTR credit (on award amounts for Phase I/II recipients) is transferable or sellable to other Louisiana taxpayers via the tax credit registry (Form R-6135 required).

Tiered by Employees

Rates decrease with size (30% 50, 10% 50-99, 5% 100+), based on Louisiana full-time equivalents. Wages for Louisiana-based employees performing qualified research…

Certification Requirements

LED pre-approval via online application with QRE documentation and fee (0.5% of requested credit; min. $500, max. $15,000). Typical processing: 3-6 months.

2025 Aggregate Cap

$12 million statewide per fiscal year starting July 1, 2025—first-come, first-served. No per-taxpayer limit; disallowed claims gain priority in the next year.

Nonrefundable with Carryforward

Offsets income/franchise tax only; unused credits carry forward up to 5 years. (Historical refunds applied to pre-2015 claims only.)

Audit and Compliance

LED audits at least 10% of applications pre-issuance (random, sector-based, or criteria-driven), reviewing invoices, W-2s, contracts, and employee records. Retain for 5 years.

High Small Business Rate

3Firms with fewer than 50 Louisiana employees qualify for 30% on excess QREs, with a lower 50% base to support early innovation in energy and biotech.

Transferable SBIR/STTR Credits

Only the separate 30% SBIR/STTR credit (on award amounts for Phase I/II recipients) is transferable or sellable to other Louisiana taxpayers via the tax credit registry (Form R-6135 required).

Tiered by Employees

Rates decrease with size (30% 50, 10% 50-99, 5% 100+), based on Louisiana full-time equivalents. Wages for Louisiana-based employees performing qualified research…

Certification Requirements

LED pre-approval via online application with QRE documentation and fee (0.5% of requested credit; min. $500, max. $15,000). Typical processing: 3-6 months.

2025 Aggregate Cap

$12 million statewide per fiscal year starting July 1, 2025—first-come, first-served. No per-taxpayer limit; disallowed claims gain priority in the next year.

Nonrefundable with Carryforward

Offsets income/franchise tax only; unused credits carry forward up to 5 years. (Historical refunds applied to pre-2015 claims only.)

Audit and Compliance

LED audits at least 10% of applications pre-issuance (random, sector-based, or criteria-driven), reviewing invoices, W-2s, contracts, and employee records. Retain for 5 years.

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Louisiana R&D Tax Credits Case Study

Illustrative results from a Louisiana manufacturing firm using the small business tier.

$240,000

total state R&D tax credits earned

60%

of wages qualified for credits

$500,000

total R&D tax credits earned (federal + state combined)

Frequent Asked Questions

What is the Louisiana R&D tax credit?

The Louisiana R&D tax credit is tiered based on employee count: 30% for businesses with fewer than 50 employees, 10% for 50-99, and 5% for 100 or more; it also offers 30% for SBIR/STTR grants, with an annual program cap of $12 million starting July 1, 2025. Contact Strike Tax to maximize your savings.

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

Activities must meet federal IRC § 41 criteria, be conducted in Louisiana, and involve at least 80% experimentation, such as developing new products or improving processes; excludes professional services or custom manufacturing without patents. Strike Tax can identify qualifying projects.

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

A 50-employee firm with $1 million in excess QREs could claim $300,000, stacked with federal credits for up to $500,000 total. Larger firms see scaled savings. Use Strike Tax’s R&D Credit Calculator for estimates.

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

No, credits are nonrefundable but carry forward up to 5 years for tax offsets. The 30% small business tier maximizes value; SBIR/STTR portions are transferable. Strike Tax optimizes for carryforward use.

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

Submit LED online application within one year of expenditure year-end, with QRE details and fee (0.5% of credit; min. $500). Obtain certification before claiming on your state return. Strike Tax manages documentation and compliance.

Can Louisiana businesses claim both state and federal credits?

Yes, stack state and federal for the same Louisiana QREs using shared IRC §41 definitions. No double-dipping issues. Strike Tax coordinates dual claims.

What is the base amount for Louisiana’s R&D credit calculation?

Base is 50% of prior 3-year average QREs for <50 employees or 80% for larger (0% if no prior). Startups often qualify 100% of current QREs. Strike Tax handles precise computations.

How does the 2025 cap affect Louisiana R&D claims?

$12 million per fiscal year (July 1 start), first-come, first-served. File early; no per-firm limit, and disallowed claims prioritize next year. Strike Tax advises on timing strategies.

Can SBIR/STTR credits be transferred in Louisiana?

Yes, only the 30% SBIR/STTR credit (on Phase I/II award amounts) is transferable/sellable via the registry (Form R-6135). Standard credits are not. Strike Tax assists with transfers.

Why is Louisiana’s R&D credit valuable for energy and manufacturing?

Employee tiers favor small innovators, with full federal stacking and 5-year carryforward. LED certification ensures compliance. Strike Tax customizes for Louisiana sectors.

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