R&D Tax Credits in Texas

Can I Claim R&D Tax Credits in Texas?

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


The Texas Research and Development (R&D) Tax Credit is a tax incentive designed for businesses involved in qualified research activities within the state. Introduced in 2014, its aim is to foster economic growth in Texas, particularly in the research and development sectors, by providing incentives. Businesses conducting qualified research can choose between two options for tax benefits: they can either avail sales and use tax exemption on tangible personal property used in research or a franchise tax credit based on qualified research expenses. The credit is typically 5% of qualified research expenses exceeding the base amount, limited to 50% of the company's franchise tax liability for the current year.

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

The Texas R&D tax credits claimed by a qualifying company can potentially contribute to significant cost savings. These benefits include:

  • Tax Liability Reduction
  • Source of Cash Flow
  • Carried Forward to 20 Consecutive Years


In credits claimed
Estimate My Credit

Who Can Claim the Texas R&D Tax Credit?

Businesses engaged in qualified research activities can claim Texas R&D tax credits. C-Corporation, S-Corporations, LLCs, and Partnerships are eligible to claim R&D tax credits in Texas.

Qualifying activities for Texas R&D tax credit that boost business growth:

  • Product Innovation
  • Enhancement of Existing Products
  • Software Development (Internal or External)
  • Manufacturing Process Improvement

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

Texas R&D Tax Credit Studies Completed


How Do I Claim the Texas R&D Tax Credit?

Texas R&D tax credit is 5% of qualified research expenses exceeding the base amount, capped at 50% of franchise tax liability. To qualify for sales tax exemption on eligible items used directly in qualified research, provide a properly completed Texas Qualified Research Sales and Use Tax Exemption Certificate (Form 01-931) to the retailer, including your registration number.

To claim the Texas R&D tax credit, the qualifying research activity must pursue technological information discovery and intend to develop new or enhanced business components.