Rhode Island R&D Tax Credit Summary

RHODE ISLAND R&D TAX CREDIT SUMMARY

Rhode Island State R&D Tax Credits

There are two credits available in Rhode Island: Research and development property credit and the qualified research expense credit.

Rhode Island State R&D Property Credit

Taxpayers are allowed a credit against business corporations, gross premiums tax, or personal income tax for tangible research and development property.

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The amount of the credit is 10% of the cost or other basis for federal income tax purposes of tangible personal property, and other tangible property, including buildings and structural components of buildings, acquired constructed, reconstructed, or erected after July 1, 1994
The credit is allowed in the year the property is first placed in service, which is the earlier of: the year the taxpayer begins depreciation of the property; or the year that the property is made ready and available for a specifically assigned function
The credit can not reduce the tax of a corporation to less than the $250 minimum tax

To qualify for the credit the property must:

be depreciable under IRC §167 or recovery property for which a deduction is allowable under IRC §168
have a useful life of three years or more
be acquired by purchase as defined in IRC §179(d)
be located in Rhode Island; and
be used principally for purposes of research and development in the experimental or laboratory sense [R.I. Gen. Laws §44-32-2(b)]

Refundable/Transferable Tax Credit – No

Carryforward

Any credit not used can be carried forward for up to seven years.

Rhode Island State R&D Expense Tax Credit

The Rhode Island Research & Development Expenses credit is available to C corporations, sole proprietorships, partnerships, joint ventures, or S corporations.

The credit is equal to 22.5% of expenses up to $111,111 and 16.9% for the remaining expenses over $111,111
Expenses must have been incurred in Rhode Island after July 1, 1994
The credit amount taken in any one taxable year may not exceed 50% of the company’s remaining tax liability after all other credits have been applied
The credit allowed shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated return

How to Obtain the Credit?

File Form RI-7695E

Refundable/Transferable Tax Credit – No

Carryforward

Any credit not used can be carried forward for up to seven years.

Flow-Through Entities

Credit is available to corporations, sole proprietors, or passed through from partnerships, joint ventures or subchapter S corporations for qualified research expenses.

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Rhode Island R&D Tax Credit Summary