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 | |||