Maine Research and Development Tax Credit Summary

Maine offers a research and development tax credit for qualified research conducted in the state of Maine. The Maine R&D credit leverages off of the federal Section 41 rules surrounding credits for increasing research activities. Maine offers a research expense tax credit which has similarities to the federal credit and also offers a super research and development tax credit

  • Research expense tax credit is governed by statute 36 §5219-K.
  • The super credit for substantially increasing research and development is governed by 36 §5219-L.
  • Qualified research expenses are limited to those expenses incurred in the state of Maine.
  • Research expense tax credit is limited to 5% of the excess qualified research expenses that exceed the previous three year average and 7.5% of basic research payments.
  • The credit is also limited to 100% of the first $25,000 in tax liability plus 75% of the liability in excess of $25,000.
  • The credit can be carried forward 15 years.
  • Super R&D credit is effective for tax years beginning before January 1, 2014.
  • The super R&D credit is based on qualifying research expenses that exceed 150% of the three-year average prior to the effective date of the credit.
  • The credit allowed is limited to 50% of the taxpayer's tax due after the allowance of any other credits taken.

Maine R&D Tax Credit Case Study

An Augusta manufacturing company creating syringes for the medical industry has been claiming the R&D credit for years. The company claims R&D 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 credits of $464,333 and an additional $65,833 in Maine state R&D Tax Credits.

  
FEDERAL
 
MAINE
Year
Total QREs
Credit
Total QREs
Credit
2014
$1,500,000
$129,500
$1,500,000
$17,500
2013
1,250,000
121,333
1,250,000
12,500
2012
1,150,000
112,000
1,150,000
15,833
2011
1,050,000
101,500
1,050,000
20,000
     
Total $4,950,000$464,333 $4,950,000$65,833