Missouri offers a nonrefundable Research Activities Credit, established under House Bill 2400 and effective for tax years beginning on or after January 1, 2023. The credit equals 15% of additional qualified research expenses (QREs) exceeding the average QREs from the prior three years. This rate increases to 20% if the research is conducted in collaboration with a public or private college or university in Missouri.

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The program has an annual aggregate cap of $10 million, with $5 million specifically allocated for small businesses, minority-owned businesses, and women-owned businesses. Individual taxpayers may claim up to a maximum of $300,000 in credits per year. Additionally, credits can be fully transferred, sold, or assigned.

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Learn more about Missouri's R&D Tax Credit law here: Missouri Department of Economic Development.

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R&D Tax Credit Available:

Yes

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Eligible Entities:

C-Corporations, S-Corporations, LLCs, Partnerships, Sole Proprietorships

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Deadline for Tax Filing:

Application due within one year from the close of the tax year in which the expenses are incurred. The application window is open from Aug 1st - Sept 30th.

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Data Required to Compute Credit:

Claim Period Federal Qualified R&D Expenses (QREs)

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What Information is Needed?

Claim Period MO QREs

MO QREs for Prior 3 Years

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Credit Carryforward:

12 years

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The R&D tax credit equals:

• 15% of the excess of qualified research expenses during the tax year over the average of the prior three years’ QREs.
• 20% of the excess of qualified research expenses if conducted with a Missouri college or university, over the average of the prior three years’ QREs.
• The credit is limited to the lesser of the calculated amount, $300,000, or 200% of the prior three years’ average QREs.

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Enacted on June 30, 2022, through House Bill 2400, the legislation reinstated Missouri’s R&D tax credit, which had been inactive since 2005. The program is scheduled to expire on December 31, 2028, unless reauthorized.

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To claim the credit, businesses must apply via the Missouri Department of Economic Development (DED) during the annual application window, open from August 1 to September 30. As outlined in Section 620.1900, RSMo, a fee amounting to 2.5% of the issued tax credits is required. Applicants will receive an invoice for the fee from the DED following the approval of their tax credit application.

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If the total eligible claims exceed the $10 million annual cap, credits are allocated on a pro-rata basis. Priority is given to new businesses (operating for less than five years), which are awarded full credits before pro-rata distribution occurs.These credits may be transferred, sold, or assigned in full through a notarized endorsement submitted to the DED. 

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Specific Items to Note:

• The credit is nonrefundable but can be carried forward for up to 12 years or until fully claimed.
• Excess credits can also be transferred, sold, or assigned.
• Purchases of Missouri-qualified R&D equipment are exempt from all state and local sales and use taxes.
• Taxpayers must be registered and in good standing with the Missouri Secretary of State (if applicable).