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

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.