Are R&D Tax Credits Available in North Dakota?

Are R&D Tax Credits Available in North Dakota?

Yes. The North Dakota state Research and Development (R&D) Tax Credit is very similar to the federal version including the definition of qualifying research. Below are some of the differences between the federal and North Dakota Tax Credits.

• There are two methods for calculating the North Dakota R&D credit:

• • Regular Method: the amount of the credit is equal to 25% of the first $100,000 of QRE for the taxable year in excess of the base amount and equal to 8% of all QREs for the taxable year more than $100,000 in excess of the base amount.
  • Alternative Simplified Method: The credit is 17.5% of the first $100,000 of excess QRE plus 5.6% of the excess QRE over $100,000.

• Qualified Research Expenses (QREs) have the same meaning as in IRC § 41, except that such expenses must be for research conducted within North Dakota . For taxpayers who earned a credit in North Dakota before January 1, 2007, the maximum credit allowed in any year is $2 million and any credit over this amount is not allowed in any year.
• An unused credit may be carried back three tax years and carried forward up to fifteen tax years.
• Subject to certain conditions, a taxpayer may sell, transfer, or assign up to $100,000 of its unused tax credit to another taxpayer if the taxpayer selling the credit is certified by the Department of Commerce Division of Economic Development and Finance to be a primary sector business with annual gross revenues of less than $750,000 that conducts qualified research in North Dakota for the first time after December 31, 2006.