Idaho Research and Development Tax Credit Summary

The Idaho R&D Tax Credit allows a taxpayer who makes expenditures in research and development activities in Idaho to claim an income tax credit. The Idaho R&D Tax credit is based on the federal section 41 credit for increasing research activities with a few notable exceptions. Below is an overview of the Idaho R&D Tax Credit:

  • The definitions of basic research payments, basic research, qualified research expenses, and qualified research are the same as the section 41 credit for increasing research activities except that only the amounts related to research conducted in Idaho qualify for the Idaho research credit.
  • Gross receipt calculations include only those gross receipts that are attributable to Idaho using the multistate corporation apportionment rules (referred to in the instructions as Idaho gross receipts).
  • The credit rate is 5% of the amount that a taxpayer's current year R&D expenditures exceed a base amount.
  • A corporation included as a member of a unitary group of corporations may elect to share the Idaho research credit it earns but does not use with other members of the unitary group.
  • The corporation must claim the Idaho research credit to the extent allowable against its Idaho income tax before it can share the credit.
  • The credit carryover is limited to 14 tax years.

Idaho R&D Tax Credit Case Study

A Boise food manufacturer develops new formulas for its expanding line of products and improved processing techniques for its manufacturing plant. The company claims R&D Tax Credits each year for the development activities of its engineers. This project involved a multi-year study covering the tax years 2011 – 2014. The company qualified for the federal R&D Tax Credits of $558,833 and an additional $166,300 in Idaho state R&D Tax Credit.

  
FEDERAL
 
IDAHO
Year
Total QREs
Credit
Total QREs
Credit
2014
$2,400,000
$264,833
$2,400,000
$71,750
2013
1,400,000
143,500
1,400,000
43,250
2012
1,000,000
98,000
1,000,000
31,050
2011
650,000
52,500
650,000
20,250
     
Total $5,450,000$558,833 $5,450,000$166,300