Rhode Island Research and Development Tax Credit Summary

The Rhode Island R&D Tax Credit allows a taxpayer who makes qualified research expenses (QREs) in Rhode Island to claim an income tax credit. Here is a summary of the credit:

  • The credit is 22.5% for QREs up to $111,111 and 16.9% for the remaining QREs, which exceed the base period expenses.
  • QREs and base period expenses have the same meaning as defined in IRC Section 41, provided that such expenses were incurred after July 1, 1994.
  • The credit is applied to 50% of the tax due; after all other credits available have been used.
  • The credit is available to corporations, individuals, partnerships and S corporations.
  • Any unused credit may be carried forward up to 7 years.

Rhode Island R&D Tax Credit Case Study

A Providence company designs and manufactures medical instruments for the health services 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 $204,167 and an additional $271,347 in Rhode Island state R&D Tax Credits.

  
FEDERAL
 
RHODE ISLAND
Year
Total QREs
Credit
Total QREs
Credit
2014
$700,000
$56,000
$700,000
$73,822
2013
650,000
52,500
650,000
69,597
2012
600,000
49,000
600,000
65,372
2011
550,000
46,667
550,000
62,556
     
Total $2,500,000$204,167 $2,500,000$271,347