Are R&D Tax Credits Available in Maine Research?
Yes. The state of Maine provides the Research and Development (R&D) Tax Credit for qualified research conducted in the state of Maine. The Maine R&D Tax Credit leverages the federal Section 41 rules surrounding credits for increasing research activities. Maine offers a research expense tax credit which has similarities to the federal credit and also offers a super research and development tax credit.
Maine Research Credit
- Research expense tax credit is governed by statute 36 §5219-K.
- Qualified research expenses are limited to those expenses incurred in the state of Maine.
- Research expense tax credit is limited to 5% of the excess qualified research expenses that exceed the previous three-year average and 7.5% of basic research payments.
- The credit is also limited to 100% of the first $25,000 in tax liability plus 75% of the liability in excess of $25,000.
- The credit can be carried forward for up to 15 years.
Maine Super Credit
- The super credit is no longer available for tax years beginning after December 31, 2013.
Maine R&D Tax Credit Case Study
An Augusta manufacturing company creating syringes for the medical industry has been claiming the R&D credit for years. 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 credit of $464,333 and an additional $65,833 in Maine state R&D Tax Credit.
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FEDERAL
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MAINE
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Year
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Total QREs
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Credit
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Total QREs
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Credit
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||
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Year 4
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$1,500,000
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$129,500
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$1,500,000
|
$17,500
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||
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Year 3
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$1,250,000
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$121,333
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$1,250,000
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$12,500
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||
|
Year 2
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$1,150,000
|
$112,000
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$1,150,000
|
$15,833
|
||
|
Year 1
|
$1,050,000
|
$101,500
|
$1,050,000
|
2$0,000
|
||
| Total | $4,950,000 | $464,333 | $4,950,000 | $65,833 | ||
You can read more about this Maine tax credit case study here.