Wisconsin Research and Development Tax Credit Summary

The state of Wisconsin R&D Tax Credit leverages off of the federal section 41 rules regarding the calculation and qualification of qualified research activities with some modifications:

  • The credit is equal to 5% (5.75% for years beginning in 2015) of the difference between the claimant's qualified research expenses incurred for research conducted in Wisconsin and its Wisconsin base amount, except that:
    • The credit is 10% (11.5% for tax years beginning in 2015 and beyond) for qualified research activities related to designing internal combustion engines for vehicles including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles.
    • The credit is 10% for qualified research activities related to the design and manufacturing of energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid-electric vehicles, that reduce the demands for natural gas or electricity or improve the efficiency of its use.
  • The definition of qualified research is the same as the federal definition with the exception that the expenditures must be incurred in Wisconsin.
  • For tax years beginning before January 1, 2013, the credit may only be claimed by corporations.
  • For tax years beginning on or after January 1, 2013, the credit may be claimed by corporations as well as by an individual, a partner of a partnership, a shareholder of a tax-option corporation, or a member of a limited liability company.
  • Taxpayers must file claims for refund within four years of the unexpected due date of the return.
  • The unused portion of the credit may be carried forward and credited against Wisconsin income or franchise taxes due for up to 15 years.

Wisconsin R&D Tax Credit Case Study

A Wisconsin software development company had never before claimed the R&D Tax Credits. This project involved a multi-year study covering the tax years 2011 - 2014. The Company qualified for the federal R&D Tax Credit of $361,666 and an additional $104,858 of state R&D Tax Credit in Wisconsin .

  
FEDERAL
 
WISCONSIN
Year
Total QREs
Credit
Total QREs
Credit
2014
$1,400,000
$141,166
$1,400,000
$51,585
2013
1,000,000
98,000
1,000,000
29,723
2012
750,000
73,500
750,000
23,550
2011
500,000
49,000
NA
NA
     
Total $3,650,000$361,666 $3,150,000$104,858