R&D Tax Credits


The R&D tax credit can help a wide variety of businesses offset and reduce their income tax liability, in addition to providing many other benefits.

Businesses in Louisiana can earn a 3% state income tax credit for the increase in their annual research and development expenses, compared to the previous two years. To calculate the credit, the eligible expenses incurred for qualifying R&D activities must be identified and calculated, including wages, supplies, and contract research. The credit must be claimed 25% each year for four years. Accurate records and documentation must be kept to determine eligible expenses.

You can claim the Louisiana Research and Development (R&D) Credit on your Louisiana income tax return for the year in which eligible R&D expenditures were made or accrued. Additionally, any unused credits can be carried forward for up to five years. However, it’s essential to note that these credits must be certified by the Louisiana Economic Development department before they can be applied to your tax return.

In Louisiana, R&D tax credits are available to companies that engage in qualifying activities to advance knowledge or improve processes, products, or technologies. These must be technological, aid in product development, and involve experimentation. Eligible expenses exclude land, equipment, surveys, customer-specific costs, and government-funded research. Some of the qualifying R&D activities include: Development of new products, Testing and experimentation, Development of prototype, Solving technical problems and the like. Accurate record-keeping is crucial for claiming credits.

Eligible businesses in Louisiana’s enterprise zones can claim for R&D tax credit if they meet legal requirements under the state and federal law. The credit requires 3 years of presence in the same enterprise zone, with prorated credit for businesses opening mid-year. Qualifying R&D activities must advance knowledge or improve processes, products or technologies. It even includes C-corporations and pass-throughs.

R&D Tax Credits in Louisiana

In Louisiana, the Research & Development (R&D) tax credit serves as a financial incentive for companies to invest in innovation and technological progress. Businesses that engage in qualified R&D activities can apply for a credit against their state income tax, thereby reducing their overall tax liability. This program aims to stimulate economic development, attract technology-focused businesses, and encourage a culture of research within the state.

The Research and Development Tax Credit motivates businesses that already have operational facilities in Louisiana to initiate or sustain research and development endeavors within the state. It offers a tax credit of up to 30% on eligible research expenses made in Louisiana, without any maximum limit or minimum threshold.

What Goes into the Louisiana R&D Tax Credit as a Qualified Research Expense?

The Louisiana research and development tax credit allows for businesses to claim a percentage of their qualifying research expenses. 

In order for an expense to qualify it must meet specific research criteria:

  1. Products, services, processes, or software must be new or improved in some way 
  2. Uncertainty must be eliminated as a result of the research 
  3. The research must be technological 
  4. Research must include experimentation processes of some nature

The types of expenses that are applicable to claim under the credit include the following:

Wages paid to employees who are directly involved in the performance of research and development activities within the state of Louisiana. This includes payments made to subcontractors involved in the performance of such activities.

Take Advantage of the
R&D Tax Credit with Source Advisors

Most states offer R&D tax credits as well with many of them being more lucrative than the federal credit. At Source Advisors, we can help assess your company’s federal R&D tax credit opportunity and also determine any state R&D tax credit availability. Our team of experienced CPAs, attorneys, engineers, and technology experts helps companies save money and create cash flow with R&D tax credits that can then help drive overall growth.