Approaching Due Date for Pennsylvania R&D Tax Credit Application

By Frank.Fioretti
August 28, 2017
Federal Tax , News and Insights , R&D

On September 15, 2017, Pennsylvania’s Research and Development Tax Credit application is due for companies qualifying for the Federal and State Research and Development Tax Credit.

Pennsylvania requires that taxpayers have qualified Pennsylvania Research and Development expenses in the current year and at least one preceding year, 2015. The goal of the R&D Tax Credit is to encourage businesses to conduct research in Pennsylvania. The credit can be taken against Corporate Net Income Tax (CNI) and Pennsylvania Personal Income Tax (PIT) Liabilities. The credit used to be applicable to Pennsylvania’s Capital Stock and Foreign Franchise Tax (CSFT) as well but, for tax years beginning after January 1, 2016, the CSFT has been eliminated. Taxpayers can apply the approved credit against their PIT or CNI in the year in which the credit is approved. Any unused credits may be carried over for up to 15 succeeding taxable years. It is also possible for the tax credit to be sold; however, it may not exceed 75% of the purchaser’s tax liability. The tax credit may not be carried back and is not refundable.

The R&D Tax credit equates to about 10% of a company’s increased research and development expenses over a base period and up to 20% of the total allocated funds have been set aside for small businesses. The cap for all businesses is $15 million. The Pennsylvania Department of Revenue will review the applications and approve them for the R&D Tax Credit. Once the taxpayer has been awarded a certificate with how much they are entitled to, they can begin the application to sell or assign their credit.

For more information on R&D Tax Credits Click Here.

Please contact Frank Fioretti, Senior Associate for PM Business Advisors with any questions about the Federal Research and Development Tax Credit or Pennsylvania State-Level Tax Credit Programs.