ARKANSAS AVAILABLE INCENTIVES
State Credit Name: The state of Arkansas offers 4 different credits for research and development:
- In-House Income Research Tax Credit
- In-House Research by a Targeted Business Tax Credit
- Research and Development in Area of Strategic Value Tax Credit
- University Based Research and Development Tax Credit
Expiration Date: Indefinite
Who Can Apply? Corporations and flow-through entities
Credit Carry Forward: Unused credit in each incentive can be carried forward for 9 years.
About the Credit:
- 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.
- 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.
- 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.
- 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.
Notes: Each credit can offset 100% of a taxpayer’s tax due in a given year.
Click here to find out if you qualify for the federal research credit.