Oregon Research and Development Tax Credit Summary

The R&D Tax Credit in Oregon is determined in accordance with IRC Sec. 41 with a few exceptions. Below are some of the differences between the federal R&D Tax Credit and Oregon R&D Tax Credit:

  • The R&D Tax Credit is determined in accordance with IRC Sec. 41, except that the applicable percentage as specified in IRC Sec. 41(a) is 5%.
  • There is an alternative calculation method available based on Oregon sales and it is lesser than the following:
    • 5% of the amount by which the qualified research expenses exceed 10% of Oregon sales,
    • $10,000 times the number of percentage points by which the qualifying research expenses exceed 10 percent of Oregon sales; or
    • The taxpayer's liability after other credits.
  • The maximum credit may not exceed $1 million for tax years after 2011 (for tax years beginning before 2012, $2 million).
  • A credit against corporation excise tax is available to eligible taxpayers for increases in qualified research expenses and basic research payments.
  • Any unused portion of the credit may be carried forward for five years.

Oregon R&D Tax Credit Case Study

An Oregon valves and fittings manufacturing company with fewer than 70 employees had never before claimed the R&D credit. This project involved the tax year 2013. The Company qualified for the federal R&D Tax Credits of $45,442 and an additional $12,306 in Oregon state R&D Tax Credit.

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