TEXAS R&D TAX CREDIT SUMMARY
Texas State R&D Tax Credit
Effective 01/01/2014, Strategic investment area credit for research and development is repealed for reports due on or after 01/01/2008, however, unused credit can be carried forward until earlier of date credit would have expired, or 12/31/2027.
Applicable to reports originally due on and after January 1, 2014, a credit is provided for qualified research conducted in Texas and is equal to:
- 5% of the difference between the qualified research expenses incurred during the period on which a report is based, and 50% of the average amount of qualified research expenses incurred during the three tax periods preceding the period on which the report is based
- If there are no qualified research expenses in one or more of the three tax periods preceding the period on which the report is based, the credit for the period equals 2.5% of the qualified research expenses incurred during that period
- If a taxable entity contract with one or more public or private institutions of higher education for the performance of qualified research and the taxable entity has qualified research expenses incurred in Texas by the taxable entity under the contract during the period on which the report is based, the credit for the report equals 6.25% of the difference
- If there are no qualified research expenses in one or more of the three tax periods preceding the period on which the report is based, the credit for the period equals 3.125% of all qualified research expenses incurred during that period
- The total credit claimed for a report (including any carry forward credit) cannot exceed 50% of the amount of franchise tax due for the report before any other applicable tax credits
How to Obtain the Credit?
A taxable entity must apply for a credit on or with the tax report for the period for which the credit is claimed.
Refundable/Transferable Tax Credit – No
Carryforward
Unused credit can be carried forward for up to 20 consecutive tax periods.
