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.