The Wisconsin R&D tax credit refundable portion will increase from 15% to 25% beginning on or after January 1, 2024. The increase will provide an incentive for research and development activity and spending by Wisconsin businesses, helping to develop new products.
The Wisconsin Act 19, Senate Bill 70 change was approved earlier this year. This article will provide information about this new change to the tax credit and what it means for Wisconsin taxpayers.
What is the Wisconsin R&D Tax Credit?
The Wisconsin R&D tax credit can help a wide variety of businesses across the state offset and reduce their income tax liability, as well as provide many other benefits to taxpayers.
The refundable portion of the credit can be claimed by Wisconsin corporations, individuals, a partner of a partnership, S-Corps, and members of a limited liability company.
Eligible research credits for the refundable portion of the credit include research credit for qualified activities, for activities related to internal combustion engines, and for activities related to certain energy-efficient products.
Qualified research expenses that can be claimed under the credit include wages paid to employees who are directly involved in the performance of research and development activities within the state of Wisconsin. This includes payments made to subcontractors involved in the performance of such activities.
Any unused research credit that is nonrefundable may be carried forward for 15 years. There is also an additional credit available for certain industries and development zones.
Changes to the Refundable Portion
For tax years beginning on or after January 1, 2024, 25% of the total R&D tax credit is eligible to be refunded. Previously, 15% of the total R&D tax credit was eligible to be refunded for tax years on or after January 1, 2021.
How Will the Refundable Portion Be Calculated?
Wisconsin Schedule R can be used to calculate the refundable (and nonrefundable) portions of the R&D tax credit. Specifically, the refundable portion of the tax credit is calculated as either 25% of the current-year R&D tax credit or, the unused amount after subtracting the current-year R&D tax credit to offset tax liability (whichever is the lesser of the two).
Get Help With Your Wisconsin R&D Tax Credit
The Wisconsin R&D tax credit can help a wide variety of businesses offset and reduce their income tax liability. At GOAT.tax, we can help assess and determine any state R&D tax credit availability. Our team of experienced CPAs, attorneys, engineers, and technology experts helps companies save money and create cash flow with R&D tax credits that can then help drive overall growth.
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