Special Notes:

1. In-House Research Income Tax Credit: Qualified companies that conduct “in-house” research that are eligible for the federal R&D credit may qualify for the Arkansas In-House R&D Credit. The credit rate is 20% of QRE’s that surpass the base year, for a period of 3 years and the incremental increase in QRE’s for the following two years.  For a start-up in-house research facility, the base year is zero, meaning the first 3 years following the date of the financial incentive agreement, all eligible expenditures can qualify for the credit.
2. In-House Research by a Targeted Business Tax Credit: Under the authority of the AEDC Executive Director, a targeted business may be granted income tax credits equal to 33% of the QRE’s incurred each year for up to five years. The application for this credit must include a project plan, the expenditures plan, the start and end dates of the project and an estimated total project costs. QRE’s are made up of in-house expenses for taxable wages paid and supplies used in the conduct of qualified research. The QRE’s must pass the federal 4-part test to qualify. Income tax credit for R&D earned by targeted businesses may be sold.
3. Research and Development in Area of Strategic Value Tax Credit: This credit is for qualifying business that invest in:
   • in-house research in an area of strategic value, meaning research in fields having long-term economic or commercial value to the state, and that have been identified in the R&D plan approved from time to time by the Board of Directors of the Arkansas Science and Technology Authority; or
   • a research and development project offered by the Arkansas Science and Technology Authority.
4. University Based Research and Development Tax Credit: A qualifying business that contracts with at least one     Arkansas college or university conducting R&D may qualify for a 33% income tax credit for QRE’s.

Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 6834 Cantrell Road, Little Rock, Arkansas provides R&D tax credit consulting and advisory services to Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, North Little Rock, Conway, Rogers, Pine Bluff and Bentonville.

If you have any questions or need further assistance, please call or email our local Arkansas Partner on (501) 588-0500.
Feel free to book a quick teleconference with one of our Arkansas R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

Arkansas R&D Tax Credit Filing Instructions

To claim the R&D tax credit in Arkansas, businesses must first apply with the Arkansas Economic Development Commission (AEDC) or the Arkansas Science and Technology Authority (ASTA), depending on the specific research and development program they qualify for (e.g., in-house research, university-based research, or strategic value research). This application typically requires a detailed project plan outlining the intent, expenditures, start and end dates, and estimated total costs of the R&D activities. Upon approval of the application, the ASTA will issue a Certificate of Tax Credit. To make the actual state R&D tax credit claim, businesses must attach a copy of this Certificate of Tax Credit to their Arkansas income tax return. It is crucial to note that while there is a federal Form 6765 for claiming federal R&D credits, the state of Arkansas does not have a similarly numbered, standalone form for the claim itself; instead, the issued Certificate of Tax Credit serves as the primary documentation to be filed with the state tax return.