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).

Vermont inventionINDEX Scores – Last 12 months

The March 2026 Vermont inventionINDEX score of 1.13 percent represents a modest stabilization in the state’s innovation output following a volatile start to the year. While this B- rating is an improvement over the 1.00 percent C- recorded in February, it remains below the 1.27 percent A- seen in January. This current performance suggests that while the state is emerging from a mid-winter slump, it has yet to regain the consistent A-range momentum that characterized the final months of 2025. The shift from a C- to a B- indicates a step in the right direction, though the growth remains tentative compared to the stronger periods seen in the recent past.

Looking across the sixty-month historical landscape, the current index score is relatively conservative compared to the state’s previous high-water marks. Vermont reached an impressive peak of 3.00 percent in February 2023, followed by a sustained period of A+ performance throughout much of late 2023 and 2024, where scores regularly exceeded 2.00 percent. Although the current 1.13 percent is significantly lower than those historic highs, it remains safely above the critical low of 0.60 percent recorded in September 2022. This suggests the state is maintaining a functional baseline for intellectual property development, even if it is currently far removed from its most prolific eras of creative output.

Achieving a higher grade, particularly in the A or A+ range, yields significant economic dividends for the Green Mountain State. A robust inventionINDEX score acts as a primary catalyst for venture capital interest and increased research and development funding from both federal and private sources. When the score rises, it typically reflects a surge in patent filings and a healthy environment for technology startups, which in turn drives high-value job creation and bolsters regional competitiveness. These periods of high performance signal to the global market that Vermont is a fertile ground for commercializing new ideas and technical advancements, ensuring long-term economic resilience.

Conversely, a downward trend in the index or a sustained period of lower ratings brings several negative implications for the state’s long-term health. Scores falling into the C or D categories, as seen intermittently over the last five years, often indicate a period of creative stagnation where the transition from research to the marketplace has slowed. This can lead to a loss of specialized talent as innovators seek more active ecosystems in neighboring states, potentially resulting in a brain drain that takes years to reverse. A lower score serves as a warning that the state may be losing its competitive edge, necessitating a strategic review of support systems and investment incentives to prevent a more permanent decline in industrial relevance.

Discussion:

In March, the Vermont inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is similar 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 Vermont office provides R&D tax credit consulting and advisory services to Burlington, South Burlington, Rutland, Barre, and Montpelier.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

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. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.