Pennsylvania R&D Tax Credit Summary
Yes. The state of Pennsylvania provides the Research and Development (R&D) Tax Credit very similar to the federal version including the definition of qualifying research. Below are some of the differences between the federal and Pennsylvania research credits.
- Pennsylvania caps its total R&D 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.
- Excess Pennsylvania research credits can be carried forward for fifteen years and are not refundable.
- Currently, there is no sunset provision for Pennsylvania’s R&D credit.
- Qualified taxpayers must submit an application to the Department of Revenue by September 15 for research expenses incurred in taxable year that ended in the prior calendar year.
Pennsylvania R&D Tax Credit Case Study
A company in Pennsylvania, Pennsylvania 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 2018 – 2021.
The Company qualified for federal R&D credits of $359,917 and an additional $148,750 in Pennsylvania.
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FEDERAL
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PENNSYLVANIA
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|||||
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Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
|
2021
|
$1,300,000
|
$135,333
|
$1,300,000
|
$65,000
|
||
|
2020
|
900,000
|
91,000
|
900,000 | 43,750 | ||
|
2019
|
650,000
|
63,000
|
650,000 | 27,500 | ||
|
2018
|
450,000
|
38,500
|
450,000 | 12,500 | ||
| Total | $3,300,000 | $359,917 | $3,300,000 | $148,750 | ||
You can read more about this Pennsylvania tax credit case study here.