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


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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If your company hasn’t considered the R&D credit in the past because you have net operating losses (NOLs) and could not utilize the credit contact us today to find out which states allow you to sell your credits and losses for up to 95 cents on the dollar. Also, qualified start-up companies can now take a credit on their payroll taxes for their R&D credit, allowing your company to utilize the R&D credit immediately, even if your company does not have taxable income.

States and the R&D Credit:

South Dakota
West Virginia
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