Can I Claim R&D Tax Credits in Maryland?
Yes, you can claim R&D tax credits in Maryland. The state offers a research and development tax credit program known as the R&D Tax Credit.
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The Research and Development Tax Credit (R&D) is a tax credit available to businesses of all sizes engaged in R&D activities within the United States. This credit is applicable to a diverse array of businesses and industries, extending well beyond traditional scientists and research laboratories. The R&D tax credit was established to encourage research and development conducted within the United States. Over time, an increasing number of companies have been utilizing this credit. Furthermore, the Protecting Americans from Tax Hikes (PATH) Act, enacted in 2015, made the R&D tax credits permanent and expanded the eligibility to include startups.
What are the Potential Benefits of the R&D Tax Credit?
Claiming R&D tax credits can lead to substantial cost savings for eligible companies. These benefits include:
- Increasing Cash Flow
- Federal and State Dollar-for-Dollar Income Tax Reduction
- Claim Credits for Open Tax Years Going Back 3-4 Years
- Reducing Your Tax Rate
$1.6 BILLION
Who Can Claim the R&D Tax Credit?
The R&D tax credit is not just for scientists and inventors. It has a broader scope than most people know.
Many companies, regardless of size or industry, are eligible to claim Research and Development (R&D) Tax Credits from the federal government. However, a majority of these companies are unaware of their eligibility. As a result, thousands of companies are missing out on substantial federal and state R&D tax credits that they could be benefiting from.
The activities that qualify for the R&D tax credit directly contribute to the growth of your business.
- Developed new products
- Improved existing products
- Developed software for internal or external use
- Improved manufacturing processes
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The activities that qualify for the Maryland R&D tax credit are the same ones driving growth in your business.
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10,700
How Do I Claim the R&D Tax Credit?
Typically, companies can claim 7-10% of their qualified expenses as a federal R&D tax credit. For instance, a software developer, engineer, or lab technician earning a W2 income of $100,000 per year could potentially save up to $10,000 in taxes.
Qualifying research expenses in your company are usually related to employee compensation, materials, and contracted services. To validate these expenses, you can provide different types of documentation such as payroll records, financial records that show expenses for supplies or contract research, and vendor invoices.