Minnesota Research and Development Tax Credit Summary

The Minnesota R&D Tax Credit is very similar to the federal version including the definition of qualifying research. Below are some of the differences between the federal and Minnesota research credits.

  • The credit is 10% of the qualifying expenditures up to $2 million, and 2.5% for expenses above $2 million
  • Only qualifying research expenses incurred in Minnesota can be captured towards the Minnesota research and development tax credit
  • For Partnerships and S corporations the credit was refundable from 2010 through 2012
  • C corporations can continue to carryforward any credits prior to 2010 and after 2012
  • For tax years beginning after 2012, C corporations may apply the credit to any member of a corporation business that is included in the combined return
  • Credit can be carried forward up to 15 years

Minnesota R&D Tax Credit Case Study

A Minnesota Company develops circuit boards used by their clients. It had never before claimed the R&D credit for the development activities of its software programmers. This project involved a four year study with a three year look back to claim credits for years 2010 through 2013. The Company qualified for the federal R&D Tax Credit of $294,360 and an additional $147,139 of state R&D Tax Credit in Minnesota.

  
FEDERAL
 
MINNESOTA
Year
Total QREs
Credit
Total QREs
Credit
2013
$1,045,800
$104,580
$1,045,800
$52,290
2012
832,499
83,331
832,499
41,625
2011
565,925
56,593
565,925
28,296
2010
498,563
49,856
498,563
24,928
     
Total $5,503,651$390,726 $5,503,651$516,329