Missouri R&D Tax Credits

State and Federal Credits Available

15% Rate

On additional QREs > 3-yr avg

20% University Bonus

For MO college collaborations

12-Yr Carryforward

Unused credits

Transferable

Sell/assign for cash

$10M Cap

$5M for small/minority/women-owned

The Missouri R&D Tax Credit, enacted under House Bill 2400 and administered by the Missouri Department of Economic Development (DED). Effective for tax years beginning on or after January 1, 2023, this nonrefundable credit offsets Missouri income tax (Chapter 143, excluding withholding) and financial institutions tax (Chapter 148) liabilities.

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15% Rate

On additional QREs > 3-yr avg

20% University Bonus

For MO college collaborations

12-Yr Carryforward

Unused credits

Transferable

Sell/assign for cash

$10M Cap

$5M for small/minority/women-owned

Key Highlights

Applies to Missouri-sourced QREs only, aligned with federal IRC § 41 standards
Available to individuals, sole proprietors, partnerships, C corporations, S corporations, LLCs, and charitable organizations exempt from federal income tax but subject to Missouri unrelated business income tax under Chapter 143
Individual cap of $300,000 per taxpayer annually; credit allowed only on Missouri QREs up to 200% of the taxpayer’s average Missouri QREs for the prior three tax years (QREs above that threshold do not generate credit)
Application window: August 1–September 30 for the prior tax year (e.g., 2024 claims open August 1, 2025)
Program sunsets December 31, 2028, unless extended

Who Qualifies

Credits are available to businesses increasing their qualified research expenses in Missouri, provided they meet federal-like criteria under IRC § 41. Eligibility hinges on entity type, Missouri-based activities, and having QREs in at least one of the prior three tax years.

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)

Missouri follows federal definitions for QREs, but only those incurred in the state qualify. Use the table below for common categories:

How to Calculate the Missouri R&D Tax Credit

Missouri uses a single regular method focused on "additional" QREs (increases over a simple three-year average base), making it straightforward for growing businesses. No alternative simplified credit (ASC) is available. All calculations use Missouri-sourced data only.

Regular Method

Determine total Missouri QREs for the current tax year (per IRC § 41 categories above).
Apply the 200% limitation: Limit current-year QREs to 200% of the prior three-year average QREs (excess does not qualify for credit).
Compute the base amount: Average Missouri QREs from the prior three tax years (must have QREs in at least one prior year; if not, no credit).
Calculate additional QREs: Limited current-year QREs minus the base (if negative, $0 credit).
Apply the rate: 15% of additional QREs (or 20% if the additional QREs are incurred in conjunction with a Missouri public/private college or university).
Cap the credit: Lesser of calculated amount or $300,000 per taxpayer.

Example Calculation

Current-year Missouri QREs$4,000,000

Prior three-year average$1,600,000

200% limitation$3,200,000 (use this as limited current QREs)

Additional QREs: $3,200,000 - $1,600,000 =$1,600,000

Standard credit: 15% × $1,600,000 =$240,000

With university collaboration: 20% × $1,600,000 =$320,000 (capped at $300,000)

Base Calculation for Missouri R&D Tax Credit

Identify Missouri-sourced QREs for the prior 3 tax years.
Compute average = (Year -1 QREs + Year -2 QREs + Year -3 QREs) / 3.
Apply as base amount (if no prior QREs in any year, no credit available).
Ensure Missouri-specific only; exclude non-Missouri expenses.

Example Calculation

Prior Year -1 QREs =$900K

Year -2 =$700K

Year -3 =$500K

→ Base = ($900K + $700K + $500K) / 3 =$700K

If no prior: → No credit (base undefined; current QREs do not qualify as excess).

Base Rules

Gross Receipts: Not directly used; base is purely prior QRE average (Missouri-only).
Startups: Businesses 5 years old get full allocation priority before pro-rata; new entities without Missouri QREs in at least one of the prior three tax years are not eligible for the credit.
Application Note: Submit via Submittable during the August–September window for the prior year (e.g., August 1–September 30, 2025, for 2024). Include IRS Form 6765 copies, tax clearance, and E-Verify proof.

Estimate Your Credits

Missouri-Specific Rules

Missouri's program emphasizes growth through additional investments, with built-in supports for collaborations and underrepresented businesses. Key features include competitive allocation and liquidity options.

Top 3 Missouri R&D Rules

University Collaboration Bonus: Earn 20% on additional QREs (vs. 15% standard) if the additional QREs are incurred in conjunction with Missouri colleges/universities, boosting claims in ag-tech and biotech.
Annual Cap with Set-Aside: $10M statewide limit ($5M reserved for small, minority-, and women-owned businesses); oversubscription leads to pro-rata, but startups (5 years) get full awards first.
Transferable Credits: Fully sellable, transferable, or assignable via notarized DED endorsement, ideal for cash-strapped innovators to monetize immediately.

Top 3 Missouri R&D Rules

University Collaboration Bonus: Earn 20% on additional QREs (vs. 15% standard) if the additional QREs are incurred in conjunction with Missouri colleges/universities, boosting claims in ag-tech and biotech.
Annual Cap with Set-Aside: $10M statewide limit ($5M reserved for small, minority-, and women-owned businesses); oversubscription leads to pro-rata, but startups (5 years) get full awards first.
Transferable Credits: Fully sellable, transferable, or assignable via notarized DED endorsement, ideal for cash-strapped innovators to monetize immediately.

Other Important Rules

Pass-Through Treatment: Credits allocate pro-rata to owners in partnerships/LLCs/S corps via K-1.
Audit and Recordkeeping: Maintain detailed documentation supporting QREs and eligibility for at least 3 years post-issuance, consistent with federal and Missouri recordkeeping rules; annual Tax Credit Accountability Act reporting to Missouri Department of Revenue required for 3 years post-issuance.
In-State Only: No credit for out-of-state QREs; purchases of Missouri-qualified R&D equipment are exempt from state/local sales and use taxes.
Fee and Expiration: 2.5% fee on issued credits (invoiced post-approval); program expires December 31, 2028, unless reauthorized.

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Missouri R&D Tax Credits Case Study

A Missouri-based ag-tech startup collaborated with a state university on crop optimization software, qualifying 60% of their $1.5M QREs for the bonus rate.

$84,000

total state R&D tax credits earned

55% of wages

qualified for credits

$210,000

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

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Strike Tax handled documentation and transfer, unlocking cash for expansion.

Frequent Asked Questions

What is the Missouri R&D tax credit?

The Missouri Qualified Research Expense Tax Credit offers 15% (or 20% with university collaboration) on additional QREs exceeding the prior three-year average, capped at $300,000 per taxpayer. Enacted via HB 2400 for tax years after January 1, 2023, it's nonrefundable but transferable. Strike Tax helps maximize your claim.

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

Activities must align with federal IRC § 41—developing or improving products, processes, or software in Missouri (e.g., new manufacturing techniques or tech prototypes). At least one prior year's QREs required for base. Strike Tax identifies qualifying projects through audits.

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

For $1,600,000 in additional QREs (after 200% limit), expect $240,000 to $320,000 in credits (capped at $300,000), stackable with federal savings. With the $10M cap and transferability, high-growth firms save big—use Strike Tax’s calculator for a personalized estimate.

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

Nonrefundable by default, but small businesses (<50 employees) access the $5M set-aside and can sell/transfer credits for cash. Carryforward up to 12 years provides flexibility. Strike Tax advises on liquidity options.

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

Apply via DED's Submittable portal August 1–September 30 for the prior year, including Form 6765 and tax clearance. Pay 2.5% fee post-approval; claim on your Missouri return. Strike Tax streamlines filing and compliance.

Can Missouri businesses claim both state and federal credits?

Yes—stack them for the same Missouri QREs to double savings. Federal payroll tax offsets (up to $500K/year for startups) pair well. Strike Tax optimizes dual claims for maximum ROI.

What is the Missouri university bonus?

If the additional QREs are incurred in conjunction with a Missouri public/private college or university, the rate jumps to 20%, ideal for joint R&D in life sciences or engineering. Strike Tax verifies partnerships for eligibility.

How does the Missouri cap work for oversubscription?

$10M total ($5M reserved); startups (<5 years) get full priority, then pro-rata distribution. High demand in ag/tech means early application is key. Strike Tax tracks windows and prepares competitive submissions.

Can startups in Missouri claim R&D tax credits?

Yes, if they have prior QREs; <5-year-old businesses get allocation priority. Pair with federal startup offsets for up to $500K in payroll relief. Strike Tax guides new entities through qualification.

What are the 2025 changes to R&D tax credits in Missouri?

No major changes for 2025; the August–September window applies to 2024 claims. Focus remains on additional QREs and transferability, with sunset looming in 2028. Strike Tax monitors for extensions.

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