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.

Total QREs
Total QREs
Year 4
Year 3
Year 2
Year 1
Total $4,950,000 $464,333 $4,950,000 $65,833

You can read more about this Maine tax credit case study here.

Four-Part Test

Qualified research activities are defined by the four-part test outlined below

Technological in Nature
Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.

Permitted Purpose
Activities must be performed in an attempt to improve the functionality, performance, reliability, or quality of a new or existing business component.

Eliminate Uncertainty
Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.

All activities must include a process of experimentation including testing, modeling, simulating, and systematic trial and error.