Alaska Research and Development Tax Credit Summary

Alaska provides a state tax credit equal to eighteen percent (18%) of a company's federal-based credits, which includes the research and development tax credit as one. This credit provides a dollar-for-dollar offset against Alaska tax liabilities. See IRC § 38 for a complete list of federal-based credits eligible for the state credit. Here is a summary of the credit:

  • The definition of qualified research expenses is the same as under IRC § 41.
  • Qualified activities need not be conducted in Alaska to qualify, but must be conducted within the United States.
  • Federal-based credits may offset Alaska alternative minimum tax (AMT) only after Alaska incentive credits are applied.
  • Unused federal-based credits may be carried back 1 year and forward for up to 20 years.
  • To claim the credit, a company must file Alaska Form 6390 – Alaska Federal-based Credits along with its state tax return.

Alaska R&D Tax Credit Case Study
An Anchorage company designs and manufactures components for the oil & gas industry. The company claims R&D credits each year for the development activities of its engineers. This project involved a multi-year study.

The Company qualified for the federal R&D Tax Credit $327,833 and an additional $59,010 of state R&D Tax Credit in Alaska.

FEDERAL ALASKA
Year  Total QREs Credit Total QREs Credit
Year 4 $1,300,000 $135,333 $1,300,000 $24,360
Year 3 900,000 91,000 900,000 16,380
Year 2 650,000 63,000 650,000 11,340
Year 1 450,000 38,500 450,000 6,930
Total  $3,300,000 $327,833 $3,300,000 $59,010