Massachusetts R&D Tax Credits

For businesses across diverse sectors seeking to optimize their tax planning and minimize their Federal and State tax obligations.

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What is the Research and Development Tax Credit (Massachusetts R&D tax credit)?

The Massachusetts R&D Tax Credit presents a golden chance for businesses to maximize tax savings while investing in research and development. Similar to the federal research credit, this credit requires companies to meet specific criteria to qualify for a refund.

 Starting in 2018, businesses have the option to use a simpler method for calculating the research credit, resembling the federal credit for qualified research expenses. By opting for the Massachusetts R&D Tax Credit, businesses can unlock substantial tax savings and allocate resources towards research and development, bolstering their competitive advantage and fostering innovation in their industries.

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

Tax Savings
Increased Cash Flow
Carryforward provisions
Economic Growth and Industry Development

OVER

1.6 BILLION

In credits claimed

Estimate Your Credit

Who Can Claim the Massachusetts R&D Tax Credit?

The Massachusetts R&D Tax Credit encourages businesses in the state to invest in research and development, promoting innovation and economic growth. It applies to both large and small companies engaging in qualifying research activities. Eligible entities include C-corporations, S-corporations, partnerships, LLCs, and sole proprietorships. For partnerships and LLCs classified as partnerships, the credit passes through to the partners or members who can claim it on their individual tax returns. Sole proprietors can also claim the credit on their personal income tax returns if they meet the eligibility requirements.

The activities that qualify for the Massachusetts R&D tax credit align closely with the activities that are fueling growth in your business.

  • Product Innovation
  • Enhancing Competitiveness
  • Software Development
  • Streamlining Manufacturing

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

Try Our Automated Massachusetts R&D Tax Credit Software

How Much Massachusetts R&D Tax Credit Can I Claim?

The Massachusetts R&D tax credit enables businesses to claim up to 10% of excess qualified research expenses (QREs) and 15% of basic research payments. Utilizing this credit allows substantial tax savings, which can be reinvested in innovation. The credit is determined by corporate excise due, capped at $25,000. 

Companies can receive a credit of up to $25,000 in corporate excise, plus 75% of any additional excise due, or the lesser of $25,000 or 75% of excess excise due. The credit applies to the first $25,000 of corporate excise due, with an additional 75% of any extra excise eligible.

10,700

Massachusetts R&D Tax Credit Studies Completed

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The GOAT.tax Approach to Massachusetts R&D Tax Credits

With our consultative approach to the research and development tax credit, we invest time understanding each client’s history, current business direction, and future growth objectives. Each year we re-evaluate a company’s ability to accept the tax credit and provide on-going recommendations to improve the Massachusetts R&D tax credits process. We proudly support a recurring service to more than 92% of our clients.

  • No Cost Feasibility Analysis
  • Understanding the Usability of the Credit Up-Front
  • Fixed Fees Include Audit Support
  • Dedicated R&D Team
  • Comprehensive Documentation Support

Massachusetts R&D Tax Credit State Benefits Available

Most states offer R&D credits to offset state tax liabilities. We’ll guide you through variations in State and Federal Massachusetts R&D tax credit rules, evaluating any states in which you qualify for and state-specific filing requirements.

See if your state offers Massachusetts R&D Tax Credit

Click on any state to know more

Name

Alabama

Not an opportunity for Alabama.

Name

Alaska

Not an opportunity for Alaska.

STATE

Arizona

NAME

Credit for Increased Research Activities

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

This credit is available to corporate taxpayers, corporate partners, exempt organizations subject to corporate income tax on unrelated business taxable income (UBTI), or S corporation shareholders.

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Arizona-based expenses. Credit follows federal regular credit computation and requires a base computation.

PERCENTAGE

Credit percentage: 24% on incremental expenses over base amount if taxpayer has $2.5MM or less in qualified QREs, 15% if over.

STATE

Arkansas

NAME

In-House Research Income Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

This credit is available to C Corporations, S Corporations, LLCs, and Partnerships

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Arkansas-based expenses. Credit is incremental.

PERCENTAGE

20% (33% for Targeted Business) on incremental expenses over base amount. The base amount is the prior year’s QREs.

STATE

California

NAME

California Research Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include California-based expenses. Credit follows federal regular credit method, also has an Alternative Incremental Research Credit (AIRC) method.

PERCENTAGE

15% on incremental expenses over the base amount

STATE

Colorado

NAME

Research and Development Income Tax Credit for Enterprise Zones

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Colorado-based expenses.

PERCENTAGE

3% on incremental expenses over base amount similar to federal ASC.

STATE

Connecticut

NAME

RC – Research and Experimental Expenditures Tax Credit (incremental) RDC - Research and Development Tax Credit (non-incremental)

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps only

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Connecticut-based expenses. Two credits available.

PERCENTAGE

20% on incremental increase in R&D expenses that are conducted in CT. 6% on non-incremental R&D expenses (less the QREs from the incremental Credit) with limitations.

STATE

Delaware

NAME

Delaware Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Delaware-based expenses. Two calculation methods.

PERCENTAGE

10% on incremental expenses over the base amount similar to the federal regular method. 50% on federal R&D credit apportioned to Delaware for smaller taxpayers.

Name

District of Columbia

Not an opportunity for District of Columbia.

STATE

Florida

NAME

Research and Development Tax Credit for Florida Corporate Income Tax

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Only applies to “business enterprises,” which includes C and S corporations but excludes partnerships and LLC’s taxed as partnerships.

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Florida-based expenses and must be in a “targeted industry”.

PERCENTAGE

10% on incremental expenses over base amount.

STATE

Georgia

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Georgia based expenses.

PERCENTAGE

10% on incremental expenses over base amount.

STATE

Hawaii

NAME

Tax Credit for Research Activities

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Refundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Hawaii based expenses.

PERCENTAGE

% on federal credit based on percentage of Hawaii-based expenses to federal expenses

STATE

Idaho

NAME

Credit for Idaho Research Activities

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps, S Corps, partnerships, trusts, and estates

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Idaho-based expenses.

PERCENTAGE

5% on incremental expenses over base amount similar to regular federal credit method.

STATE

Illinois

NAME

Research & Development Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Illinois-based expenses.

PERCENTAGE

6.5% on incremental expenses over the average of the three prior years.

STATE

Indiana

NAME

Indiana Research Expense Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Indiana based expenses.

PERCENTAGE

15% on first $1,000,000 of incremental research expenses over a base amount and 10% on incremental expenses in excess of $1,000,000. Calculation similar to federal regular method. Alternative method: 10% credit on incremental expenses similar to federal ASC method.

STATE

Iowa

NAME

Research Activities Credit (RAC)

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Refundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Iowa based expenses and certain industries allowed or excluded.

PERCENTAGE

6.5% on the incremental expenses with a calculation similar to the regular federal method Alternatively, 4.55% on expenses that exceed a base amount similar to federal ASC.

STATE

Kansas

NAME

Credit Against Tax for Certain Research and Development Activity Expenditures

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps only

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Kansas-based expenses.

PERCENTAGE

6.5% on incremental expenses over base amount. Base amount is equal to average of current plus two prior years.

Name

Kentucky

Not an opportunity for Kentucky.

STATE

Louisiana

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

A non-refundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities except only include Louisiana-based expenses. You must apply for the credit. Professional services and custom manufacturing companies do not qualify.

PERCENTAGE

30% on incremental expenses over base amount for companies with 0-49 employees 10% on incremental expenses over base amount for companies with 50-99 employees 5% on incremental expenses over base amount for companies with more than 100 employees

STATE

Maine

NAME

Research Expense Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Maine-based expenses.

PERCENTAGE

5% on incremental expenses over base amount.

STATE

Maryland

NAME

Basic R&D Tax Credit and Growth R&D Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Two nonrefundable credits (Basic and Growth) with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Maryland-based expenses.

PERCENTAGE

Credit percentage: 3% on Maryland expenses for Basic Credit. 10% on incremental expenses over base amount for the Growth Credit.

STATE

Massachusetts

NAME

Research Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

It applies to corporations paying excise tax under MGL c 63

DESCRIPTION

Two nonrefundable credits (Fixed Base Ratio and ASC) with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Massachusetts-based expenses.

PERCENTAGE

10% on incremental expenses for Fixed Base Ratio method. 7.5% on incremental expenses for 2020 (10% for 2021 and after) for ASC method.

Name

Michigan

Not an opportunity for Michigan.

STATE

Minnesota

NAME

Credit for Increasing Research

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes, but not to Sole Proprietorships

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Minnesota-based expenses.

PERCENTAGE

10% on first $2 million of incremental expenses; 4% on incremental expenses in excess of $2 million.

Name

Mississippi

Not an opportunity for Mississippi.

Name

Missouri

Not an opportunity for Missouri.

Name

Montana

Not an opportunity for Montana.

STATE

Nebraska

NAME

Research Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Applies to any business entity that is “subject to sales tax"

DESCRIPTION

Refundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Nebraska-based expenses. Credit is based on Federal credit.

PERCENTAGE

15% of federal credit amount.

Name

Nevada

Not an opportunity for Nevada.

STATE

New Hampshire

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Credits are available to business organizations that have expenditures made during the fiscal year and subject to Business Profits Tax.

DESCRIPTION

Refundable credit with similar definition to federal, except only include New Hampshire-based wage expenses.

PERCENTAGE

10% on qualified New Hampshire wage expenses, not to exceed 50,000.

STATE

New Jersey

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps and S Corps only

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include New Jersey-based expenses.

PERCENTAGE

10% on incremental expenses similar to federal method. Regular or ASC may be chosen for calculation method.

STATE

New Mexico

NAME

Technology Jobs and Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps, S Corps and any entity treated as a Partnership for federal income tax purposes.

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include New Mexico-based expenses.

PERCENTAGE

5% of expenses or 10% of expenses if conducted in rural area. Additional credit if certain requirements are met.

Name

New York

Not an opportunity for New York.

Name

North Carolina

Not an opportunity for North Carolina.

STATE

North Dakota

NAME

Research Expense Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include North Dakota-based expenses.

PERCENTAGE

Up to 25% for regular method or up to 17.5% for ASC method, dependent on when research began in North Dakota.

STATE

Ohio

NAME

Credit for Qualified Research Expenses

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

The credit is only available to entities paying the Commercial Activity Tax (CAT)

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Ohio-based expenses.

PERCENTAGE

7% on incremental expenses over base amount. Base amount is the average expenses from the three prior years.

Name

Oklahoma

Not an opportunity for Oklahoma.

Name

Oregon

Not an opportunity for Oregon.

Name

Wyoming

Not an opportunity for Wyoming.

STATE

Pennsylvania

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Pennsylvania-based expenses.

PERCENTAGE

10% (20% for "small business") on incremental expenses over base amount. Base amount is average expenses from four prior years.

STATE

Rhode Island

NAME

Research & Development Expense Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

C Corps only

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Rhode Island-based expenses.

PERCENTAGE

22.5% on incremental expenses up to $111,111 and 16.9% on expenses over $111,111.

Name

South Dakota

Not an opportunity for South Dakota.

STATE

South Carolina

NAME

Tax Credit for Research and Development Expenditures

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include South Carolina-based expenses.

PERCENTAGE

5% of expenses.

Name

Tennessee

Not an opportunity for Tennessee.

STATE

Texas

NAME

Research & Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Can apply against Franchise Tax for all business entities.

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Texas-based expenses.

PERCENTAGE

5% on incremental expenses over base amount. Base amount follows federal ASC method.

STATE

Utah

NAME

Tax Credit for Research Activities in Utah (Code 12)

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Two nonrefundable credits (Flat and Incremental) with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Utah-based expenses.

PERCENTAGE

5% on incremental expenses over base amount for Incremental Credit 7.5% of expenses for the Flat Credit

STATE

Vermont

NAME

Research and Development Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Vermont-based expenses.

PERCENTAGE

27% of the federal tax credit.

STATE

Virginia

NAME

Research and Development Expenses Tax Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Refundable credit with similar definition to federal for Qualified Research Expenses and Qualified Research Activities, except only include Virginia-based expenses.

PERCENTAGE

15% on first $300,000 of expenses over a base amount. Limited to $45,000.

Name

Washington

Not an opportunity for Washington.

Name

West Virginia

Not an opportunity for West Virginia.

STATE

Wisconsin

NAME

The Basic Research Credit

DOES IT APPLY TO C-CORPS & PASS THROUGHS?

Yes

DESCRIPTION

Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Wisconsin based-expenses. There is additional credit available for certain industries and development zones.

PERCENTAGE

5.75% on incremental expenses over base amount. Base amount follows federal ASC method.

Name

Wyoming

Not an opportunity for Wyoming.

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Massachusetts R&D Tax Credit Study Process

Massachusetts R&D Credit Estimate
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Field Work & Credit Calculation
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Industries

Aerospace

Aerospace manufacturers qualify for the research and development tax credit...

Tool & Die

Tool and die manufacturers are uniquely qualified for as they are designing...

Metal Fabrication

The metalworking industry, like other manufacturing industries, is one that is highly...

Plastics & Injection Molding

The plastics and injection molding industry is one that is uniquely qualified with regard...

Manufacturing

Manufacturing has always been the main focus of the research and development tax credit...

Architecture & Engineering

The Architecture and Engineering (A&E) and straight engineering space have been...

Food & Beverage

Food and beverage manufacturers often do not know that they qualify for the...

Financial Services

Many financial services companies develop proprietary software systems that qualify...

Mortgage & Banking

Manufacturing has always been the main focus of the research and development tax credit...

Construction / MEP

While the majority of research and development tax credita within the Architecture...

Software Development

Software companies are probably the fastest growing market for the Massachusetts R&D tax credit...

Chemical

Chemical manufacturers perform activities across a broad range of categories...

Contract Manufacturing

Most contract manufacturers do not believe that they qualify for the R&D credit because...

Pharma

The pharmaceutical, nutraceutical, and bioceutical industry is filled with ...

Oil & Gas

This study surrounds a financial technology company that specializes in algorithmic...

Consumer Products

Manufacturing has always been the main focus of the research and development tax credit...

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Hire US-based engineers, developers, or scientists.
Designs and develops product prototypes and/or software.
Performs experimentation and validation on products, manufacturing processes, and/or software.
None of the above.

This calculator has been developed utilizing data from a variety of studies conducted in the industries listed. This is only an approximation based on a variety of assumptions and should be treated as such.

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