R&D Tax Credits in Minnesota

Can I Claim R&D Tax Credits in Minnesota?

Yes, you can claim R&D tax credits in Minnesota. The state offers a research and development tax credit program known as the Credit for Increasing Research.


The Research and Development Tax Credit (R&D) is available to businesses of all sizes in the United States that engage in research and development activities. This tax credit is not limited to scientists and research labs, but extends to a diverse range of industries and businesses. The R&D tax credit was established to encourage research and development conducted in the United States. Each year, an increasing number of companies are utilizing this tax credit. Furthermore, in 2015, the PATH Act 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?

Qualifying companies can obtain substantial cost savings through claiming R&D tax credits. 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


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Who Can Claim the R&D Tax Credit?

R&D tax credits are not just for scientists or groundbreaking products. They are available to companies of all sizes and industries. However, many companies are unaware that they qualify for these credits. Thousands of businesses are missing out on valuable federal and state R&D tax credits.

The activities driving growth in your business are also the ones that meet the criteria for the R&D tax credit.

  • Developed new products
  • Improved existing products
  • Developed software for internal or external use
  • Improved manufacturing processes

The activities that qualify for the Minnesota R&D tax credit are the same ones driving growth in your business.

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How Do I Claim the R&D Tax Credit?

Companies can potentially claim 7-10% of their qualified expenses as a federal R&D tax credit. For instance, if a software developer, engineer, or lab technician earns $100,000 yearly and receives a W2, they could save up to $10,000 in taxes.

Research activities-related expenses in your company generally include employee compensation, materials, and contracted services. To substantiate your eligible expenses, you can provide different types of documentation such as payroll records, financial records indicating supply or contract research expenses, and vendor invoices.