Are R&D Tax Credits Available in Missouri?
No. While companies located in the state of Missouri may qualify for the Federal Research Development (R&D) Tax Credit, Missouri no longer offers the credit at the state level at this time. The state R&D Tax Credit expired in 2005.
Beginning January 1, 2023, the Director of the Department of Economic Development (DED) may authorize a tax credit of 15% of a taxpayer’s qualified research expenses OR 20% if the additional research expenses related to research that is conducted in conjunction with a public or private college or university located in Missouri.
- Any unutilized credits may be carried forward for 12 years.
- The annual cap for the credit is set at $10 million.
- The credit is capped at $300,000 for a single taxpayer.
- $5 million is reserved for minority businesses, women’s companies, and small businesses.
- The purchase of Missouri-qualified research and development equipment is specifically exempt from state and local sales and use tax.
- The credit provisions will expire on December 31, 2028.
The qualified expenses for this credit must relate to the activities meeting the requirements of IRC §41 (To be eligible for R&D Tax Credits, research activities must meet the criteria in the IRS Four-Part Test). The tax credits are available for expenditures including:
- Wages paid to an employee performing research activities conducted at a facility in Missouri.
- Wages paid to any employees directly supporting or directly supervising an employee performing research activities conducted at a facility in Missouri.
- Supplies used or consumed while performing research activities at a facility in Missouri.
- A portion of 3rd party research was conducted in Missouri.
You can read more about this in our article on Reviving Missouri’s Tax Credit in 2023.
Get More Information About the R&D Tax Credit
The R&D Tax Credit, first enacted in 1981, has been one of the most valuable credits leveraged by companies. Every year, the R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. This credit provides much-needed cash to hire additional employees, increase R&D, expand facilities, and more. Thousands of companies take advantage of the credit across several industries. » Learn More