You can claim the R&D Tax Credit on your Minnesota Income Tax Return if:
- You are a partner in a partnership or shareholder in an S Corporation
- The partnership or business had qualifying R&D expenses in Minnesota that exceeded its “base amount” (as calculated for the federal R&D credit, but based on Minnesota gross receipts).
The credit is equal to 10% of qualifying expenses up to $2 million, and 2.5 % of expenses above that level. Qualifying expenses include
- R&D expenses for the federal R&D credit and are for research done in Minnesota
- Contributions to qualified nonprofit organizations that make grants to small technologically innovative businesses in Minnesota during their early development years.
Effective beginning the tax year 2013, the R&D Tax Credit is nonrefundable. If your business paid certain R&D expenses you may qualify for the Increasing Research Activities Credit. Any amount of the credit that you are not able to claim in the current year may be carried forward for up to 15 years.
For Tax years before 2013, the credit is refundable, and you may claim it even if your business did not make a profit for the year.
Refundable/Transferable Tax Credit – No
The credit can be claimed for the tax year during which the taxpayer qualifies for the credit. If the credit exceeds the limitation, the excess amount may be carried forward for up to 14 tax years.
Find out if you qualify for the R&D tax credit
States and the R&D Credit: