North Carolina R&D Tax Credits

North Carolina does not offer a state-specific R&D tax credit (expired in 2015), but businesses can claim the federal R&D tax credit for qualified research expenses incurred in North Carolina. Contact Strike Tax to maximize your savings.

Qualifying activities must be technological, aimed at developing or improving a business component, eliminate uncertainty, and involve experimentation. Examples include product innovation or process improvements in industries like biotech or manufacturing. Strike Tax can identify qualifying projects.

Yes, startups can claim the federal R&D credit, including a payroll tax offset of up to $500,000 annually for up to five years if gross receipts are under $5 million and no receipts for more than five years. Strike Tax can guide eligibility.

Maintain contemporaneous records such as project descriptions, time tracking, wage allocations, supply costs, and contract research agreements. For 2025, Form 6765 includes a new Section G that asks for detailed business component information, but the IRS has made Section G optional for tax year 2025 and plans to make it mandatory starting in 2026 for most taxpayers. Documentation expectations are still increasing, so it is smart to build Section G level support now. Strike Tax ensures audit-ready documentation.

Attach Form 6765 to your federal return to claim the credit. Your North Carolina corporate or individual return starts from federal amounts, so the credit can affect your overall tax planning, even though NC does not have its own R&D credit for 2025. Strike Tax streamlines the process across both federal and state filings.

No state R&D credit is available in 2025 following the expiration in 2015 and non-enactment of bill S354. Federal credits remain unchanged, with enhanced documentation requirements under IRC §41. Strike Tax monitors updates for federal optimizations.

The federal R&D credit offers up to 20% on qualified research expenses exceeding a base amount, or 14% under the Alternative Simplified Credit method. Mississippi businesses can claim this alongside the unrelated state Skills Credit for enhanced overall savings.

QREs include wages for research personnel, supplies used in experimentation, 65% of contract research payments, and computer leasing costs. Activities must meet the four-part federal test (technological in nature, business component, uncertainty elimination, experimentation). Strike Tax verifies North Carolina-specific eligibility.

Use the regular method (20% over fixed-base percentage of prior gross receipts) or ASC (14% over 50% of prior three-year average QREs). For example, $1M in QREs with a $600K base yields $80K under regular. Strike Tax provides precise North Carolina-focused estimates.

Federal R&D credits reduce federal income tax and can be carried forward for up to 20 years. State corporate income tax in North Carolina is calculated under separate rules, and the state does not currently offer a new R&D credit for 2025 activity. Strike Tax helps plan carryforwards for multi-year benefits.