R&D Tax Credits in North Dakota

Can I Claim R&D Tax Credits in North Dakota?

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

North Dakota

The Research and Development Tax Credit (R&D) is a tax credit available to businesses of all sizes that engage in research and development activities in the United States. This credit is applicable to a diverse range of industries and companies, going beyond traditional research laboratories and scientists. The R&D tax credit was designed to encourage research and development endeavors conducted in the United States. The number of companies benefiting from this tax credit increases every year. Moreover, the Protecting Americans from Tax Hikes (PATH) Act, enacted in 2015, not only made the R&D tax credits permanent but also expanded the eligibility to include startups.

What are the Potential Benefits of the R&D Tax Credit?

When an eligible company takes advantage of R&D tax credits, it can achieve significant cost savings. 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?

The misconception that R&D tax credits are limited to scientists and cutting-edge products is widespread. However, the reality is that these credits are available to companies of all sizes and industries. There are countless businesses that qualify for Research and Development (R&D) Tax Credits but are unaware of it. This means they are missing out on potentially significant federal and state tax benefits.

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 North Dakota 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?

Typically, companies have the potential to claim a federal R&D tax credit amounting to 7-10% of their qualified expenses. As an example, take a software developer, engineer, or lab technician with an annual W2 income of $100,000; they might enjoy tax savings of up to $10,000.

To qualify as research expenses in your company, employee compensation, materials, and contracted services are usually included. There are different forms of documentation that can support your qualified expenses, such as payroll records, financial records indicating supply or contract research expenses, and vendor invoices.