Rhode Island Research and Development Tax Credit Summary
The Rhode Island R&D Tax Credit allows a taxpayer who makes qualified research expenses (QREs) in Rhode Island to claim an income tax credit. Here is a summary of the credit:
- The credit is 22.5% for QREs up to $111,111 and 16.9% for the remaining QREs, which exceed the base period expenses.
- QREs and base period expenses have the same meaning as defined in IRC Section 41, provided that such expenses were incurred after July 1, 1994.
- The credit is applied to 50% of the tax due; after all other credits available have been used.
- The credit is available to corporations, individuals, partnerships and S corporations.
- Any unused credit may be carried forward up to 7 years.
Rhode Island R&D Tax Credit Case Study
A Providence company designs and manufactures medical instruments for the health services industry. The company claims the R&D Tax Credit each year for the development activities of its engineers. This project involved a multi-year study.
The company qualified for the federal R&D Tax Credits of $204,167 and an additional $271,347 in Rhode Island state R&D Tax Credits.
|
FEDERAL
|
RHODE ISLAND
|
|||||
|
Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
|
Year 4
|
$700,000
|
$56,000
|
$700,000
|
$73,822
|
||
|
Year 3
|
650,000
|
52,500
|
650,000
|
69,597
|
||
|
Year 2
|
600,000
|
49,000
|
600,000
|
65,372
|
||
|
Year 1
|
550,000
|
46,667
|
550,000
|
62,556
|
||
| Total | $2,500,000 | $204,167 | $2,500,000 | $271,347 | ||