R&D Tax Credits in Vermont

Can I Claim R&D Tax Credits in Vermont?

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


The Research and Development Tax Credit (R&D) is a tax credit designed for businesses, regardless of their size, engaged in research and development activities in the United States. This tax credit has a broad application, encompassing a wide range of businesses and industries, extending far beyond the realm of scientists and research laboratories. The R&D tax credit was introduced to encourage research and development efforts in the United States. It has become increasingly popular among companies who see the value in this incentive. Furthermore, the Protecting Americans from Tax Hikes (PATH) Act in 2015 made the R&D tax credits permanent and expanded the benefits to include startups.

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

Qualifying companies may benefit from substantial cost savings through the utilization of 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


In credits claimed
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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 their size or industry, are eligible for Research and Development (R&D) Tax Credits offered by the federal government. Unfortunately, a large number of these companies are unaware of their eligibility and miss out on substantial financial benefits. Numerous businesses are leaving money behind by not taking advantage of both federal and state R&D tax credits that they are entitled to.

The activities eligible for the R&D tax credit are the exact ones fueling your business's growth.

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

The activities that qualify for the Vermont 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 claim a federal R&D tax credit on average 7-10% of their qualified expenses. For instance, a software developer, engineer, or lab technician earning $100,000 annually can save up to $10,000 in taxes.

Qualifying expenses for research activities in your company usually consist of employee compensation, materials, and contracted services. To support your eligible expenses, you can provide different types of documentation such as payroll records, financial records showing expenses for supplies or contract research, and vendor invoices.