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The State of Massachusetts, under 830 CMR 63.38M, offers a refundable tax credit so long as companies meet the requirements of IRC § 41. The Economic Development Act, St. 2014, c. 287, revised the research credit provisions in G.L. c. 63, § 38M, effective for tax years beginning on or after January 1, 2015.
Starting in 2018, one of the revisions provides business corporations with the option of electing to have the research credit determined under an alternative simplified method, calculated in a manner similar to the federal credit for qualified research expenses in Internal Revenue Code § 41.
The state places a cap on credit utilization, allowing the Massachusetts R&D credit to be applicable only to the extent that a minimum tax of $456 still exists. Massachusetts allows companies to elect to use either their federal gross receipts or their Massachusetts gross receipts in calculating the credit. The election will remain for the next three years.
Additionally, the credit is limited to 100% of the first $25,000 of corporate excise liability plus 75% of the liability over $25,000. Unused credits may be carried forward even in the event of a merger.
Qualified Massachusetts Research Expenses (as defined by IRC section 41) can include any of the following expenses directly attributed to research and development activities conducted in the state:
R&D Tax Credit Available:
C Corporations, S Corporations, Unincorporated Flow-Through Entities
Deadline for Tax Filing:
Due with Massachusetts Tax Return on Form Schedule RC
Data Required to Compute Credit:
Claim Period Qualified Research Expenses (QREs)
What Information is needed?
QREs for Prior 4 Tax Years
Gross Receipts for Prior 4 Tax Years
Indefinite for credits capped by the 75% Excise Tax limitation
To get an estimate of the potential value of your unclaimed R&D Tax Credits, try out our credit calculator.
Download our R&D Tax Credit Calculator for Android to see how much you can receive from your qualified R&D tax credit expenses.