Connect with us to find out how R&D Tax Credits can boost your organization’s performance.
Texas provides a Research and Development Credit to incentivize investment in the state. Enacted in 2014, the Texas R&D credits may be applied one of two ways:
Determining how to use the credit is part of STRIKE's analysis and is dependent on your specific financial position. The taxpayer can only chose one method each year.
Texas R&D credits calculated for the current tax year are applied to the Franchise Tax Report in the subsequent tax year. Therefore, for R&D tax credits calculated based on 2020 expenses, those credits will be utilized on the 2021 Franchise Tax filing. If a Company decides to use the credits toward the franchise tax credit, the credit amount equals 5% or 6.5% of the difference between:
The credit is claimed using a Long Form Franchise Tax Report (05-158-A and 05-158-B) with a Credits Summary Schedule (05-160) and a Research and Development Activities Credits Schedule (05-178). The forms can also be submitted electronically using the Texas Comptroller's portal.
If a taxpayer chooses to use the R&D credit toward sales and use tax, the credits are calculated in the same manner (5% or 6.5% of excess QREs over the prior three-year average QREs). The taxpayer must apply online for a Registration Number and complete Form 01-931 (Texas Qualified Research Sales and Use Tax Exemption Certificate). This certificate is presented when purchasing qualifying items.
The company must register with the Comptroller’s office, and the taxpayer cannot apply for the franchise tax credit in the same tax period as using the sales and use tax exemption certificate.
Learn more about R&D Tax Credit law here!
R&D Tax Credit Available:
C-Corporation, S-Corporations, LLCs, Partnerships
Deadline for Tax Filing:
Franchise Tax Form due May 15th (or extended to November 15th)
Data Required to Compute Credit:
Claim Period Texas Qualified R&D Expenses (QREs)
What Information is needed?
Texas QREs for Prior 3 Years
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.
We were hoping you’d say that. The fundamental truth is that we perform better when we have efficiency and effectiveness in mind.
Minimizing your tax liability only increases your organization’s value and performance, while providing greater opportunity for every dollar.