CALIFORNIA INVENTIONINDEX | OCTOBER 2025
October 2025: 2.06% (B+ grade)
California inventionINDEX October 2025: 2.06% (B+ grade)
The inventionINDEX measures innovation output by comparing GDP growth with patent production growth.
Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).
California inventionINDEX Scores – Last 12 months
| Month | inventionINDEX Score |
| October 2025 | 2.06% |
| Sep 25 | 2.72% |
| Aug 25 | 2.28% |
| Jul 25 | 3.34% |
| Jun 25 | 2.04% |
| May 25 | 2.33% |
| Apr 25 | 2.42% |
| Mar 25 | 2.09% |
| Feb 25 | 2.27% |
| Jan 25 | 2.55% |
| Dec 24 | 2.61% |
| Nov 24 | 1.88% |
| Oct 24 | 2.78% |
The California inventionINDEX for October 2025 stands at 2.06%, earning a B+ grade. This score indicates a positive sentiment, though it is notably lower than the previous month’s 2.72% (A+ grade) and the 2.78% (A+ grade) recorded in October 2024. Observing the past year, the index has shown fluctuations, with a peak of 3.34% in July 2025 and a low of 1.88% in November 2024. This suggests a dynamic landscape for innovation output within the state, where recent performance, while still positive, has not consistently matched some of the higher points seen in the immediate past.
A higher inventionINDEX grade, particularly anything above a C, signifies a robust innovation output, which is generally a positive indicator for economic health. Such periods often correlate with increased GDP growth relative to patent production, suggesting a fertile environment for new ideas and their commercialization. This can lead to job creation, attract investment, and foster a competitive economic climate. When the index is strong, it reflects a healthy balance between inventive activity and economic expansion, positioning the state favorably for sustained growth and resilience against economic downturns.
Conversely, a lower inventionINDEX score, especially one falling below a C grade, signals a less favorable outlook. This could imply that patent production growth is not keeping pace with GDP growth, or perhaps both are stagnating. Such a trend might indicate challenges in the innovation ecosystem, potentially stemming from reduced research and development capabilities, company closures, or a shrinking workforce. These factors can collectively hinder economic recovery and growth, making the state more vulnerable to economic pressures and less attractive for future investment in innovative ventures.
Analyzing the broader historical data, the California inventionINDEX has experienced periods of strong performance, such as the 4.05% (A+ grade) in October 2023, which represents one of the highest points in the last 60 months. However, there have also been instances of lower scores, such as 1.52% (B- grade) in June 2022 and 1.62% (B- grade) in January 2022. The current October 2025 score of 2.06% falls within the mid-range of historical performance, suggesting a stable but not exceptionally strong period for innovation. Understanding these trends is crucial for predicting economic recovery and comparing California’s innovation performance against other regions.
Discussion:
In October, the California inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a slight downward trend.
As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.
Learn More:
Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.
Swanson Reed’s California office provides R&D tax credit consulting and advisory services to Pasadena, Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, Oakland, Bakersfield, Anaheim, Santa Ana, Riverside, Stockton, Chula Vista, Irvine, Fremont, San Bernardino, Modesto, Oxnard and Fontana.
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Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years.
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What is the R&D Tax Credit?
The Research & Experimentation Tax Credit (or R&D Tax Credit), is a general business tax credit under Internal Revenue Code section 41 for companies that incur research and development (R&D) costs in the United States. The credits are a tax incentive for performing qualified research in the United States, resulting in a credit to a tax return. For the first three years of R&D claims, 6% of the total qualified research expenses (QRE) form the gross credit. In the 4th year of claims and beyond, a base amount is calculated, and an adjusted expense line is multiplied times 14%. Click here to learn more.
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