Are R&D Tax Credits Available in Missouri?

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.