Delaware R&D Tax Credit Summary

R&D Tax Credit, Deleware R&D Tax Credit
Delaware R&D Tax Credit

  • Effective for taxable years after December 31, 2003, a state credit against tax is allowed for amounts paid or incurred for research and development in accordance with IRC § 41, as modified by Delaware [Del. Code Ann.30 §2073]
  • Under federal law, the research credit is 20% of qualified research expenses for business-based research and 20% of basic research expenses for university-based research for the income year
  • Delaware has a statewide cap of $5 million per fiscal year. Whenever statewide applications exceed $5 million, receipts are to be allowed pro rata according to the approved amount so that the total approved credits do not exceed $5 million

Effective for tax periods beginning after December 31, 2013 and subject to the $5 million overall cap and a limitation that the credit cannot exceed 50% of the qualified tax liability for the taxable year, a “small business” taxpayer may elect a credit equal to either:

  • 20% of the excess of the taxpayer’s total Delaware qualified research and development expenses for the taxable year over the taxpayer’s Delaware base amount, or
  • 100% of Delaware’s apportioned share of the taxpayer’s federal research and development tax credit calculated using the alternative incremental credit method under IRC § 41(c)(4)

For purposes of the credit, a “small business” means any taxpayer with average annual gross receipts not more than $20 million as determined under IRC § 41(c)(1)(B).

How to obtain the credit?

Delaware taxpayers must apply for the state credit by September 15 of each tax year on Form 2070AC.

Refundable/Transferable Tax Credit – No

Carryforward

Unused credits may not be carried back, but may be carried forward fifteen years.


Find out if you qualify for the R&D tax credit

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