r&d tax credit massachusetts

R&D Tax Credits Massachusetts

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 Massachusetts can claim up to 10% of excess qualified research expenses (QREs) over the qualified research base amount and 15% of basic research payments for the taxable year through the R&D tax credit. Opting for the Massachusetts R&D tax credit and using the right calculation method can result in significant tax savings for businesses that can be reinvested in research and innovation. The credit amount available is based on the corporate excise due and capped at $25,000. Companies can receive a credit of up to $25,000 in corporate excise plus 75% of any excess excise due or the lesser of $25,000 or 75% of any excess excise due. The credit is limited to the first $25,000 of corporate excise due, with 75% of any additional excise also eligible for the credit.

The Massachusetts R&D Tax Credit offers a valuable opportunity for businesses investing in research and development. If you have qualified research expenses (QREs) during the tax period, you may be eligible for the credit to offset your tax liability. While the credit is non-refundable, it can still provide substantial tax savings for your business. Massachusetts R&D Tax Credit can be claimed by C Corporations, S Corporations, and unincorporated pass-through entities.

In Massachusetts, research expenses include employee compensation, contractor remuneration, as well as supply expenses. This credit applies only if services and supplies are used for research in the state of Massachusetts.

R&D Tax Credits in Massachusetts

The Massachusetts R&D Tax Credit offers businesses an excellent opportunity to maximise tax savings while investing in research and development. This credit bears a strong resemblance to the federal research credit available under Sec. 41 of the Internal Revenue Code as of August 12, 1991. Companies must meet certain requirements in order to qualify for a refund under this policy.

Businesses will be given the opportunity to choose a different, more straightforward approach to calculating the research credit starting in 2018. This new method is similar to the federal credit for qualified research expenses, providing businesses with even more flexibility and unique benefits.

By choosing the Massachusetts R&D Tax Credit, businesses can unlock significant tax savings and invest in their future. The credit provides an unmatched opportunity for companies to reinvest in research and development, enhancing their competitive edge and contributing to innovation in their respective industries

r&d tax credit massachusetts

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

The Massachusetts 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 Massachusetts. 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.