Pennsylvania Research and Development Tax Credit Summary
The Pennsylvania research credit is very similar to the federal version including the definition of qualifying research. Below are some of the differences between the federal and Pennsylvania R&D Tax Credits.
- Pennsylvania caps its total R&D Tax Credit at $55 million ($11 million set aside for qualified small businesses)
- The credit rate in Pennsylvania is 10% (20% for qualified small businesses)
- Pennsylvania offers a modified Alternative Simplified Credit
- Qualified research must take place in Pennsylvania
- Unused Pennsylvania research credits can be carried forward for fifteen years
- Currently, there is no sunset provision for Pennsylvania's R&D Tax Credit
- Qualified taxpayers must submit an application to the Department of Revenue by September 15 for research expenses incurred to taxable year that ended in the prior calendar year
Pennsylvania R&D Tax Credit Case Study
A Philadelphia company manufactures components for the aerospace industry. 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 $359,917 and an additional $148,750 in Pennsylvania state R&D Tax Credits.