May 2026: 1.73% (A+ grade)

North Carolina inventionINDEX May 2026: 1.73% (A+ 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).

North Carolina inventionINDEX Scores – Last 12 months

The North Carolina inventionINDEX registered a score of 1.73% with an A+ rating in May 2026. This performance marks a notable rebound from the 1.51% score and B+ rating observed in April 2026, aligning precisely with the historical 60-month average of approximately 1.73%. This recent upward movement indicates a recovery from the softer performance witnessed at the start of 2026, when both January and April saw the index slip to 1.51%. By restoring its standing to the A+ band, the current score demonstrates that the state’s innovation framework remains resilient, balancing out recent monthly volatility and returning to its established long-term baseline.

A broader examination of the historical data reveals a pattern of robust, multi-year progression leading up to the current period. The index reached its lowest historical point in December 2021, when it dipped to 1.12% with a C+ rating. Following that cyclical trough, North Carolina experienced a steady expansion, with annual averages climbing from 1.54% in 2021 to peak levels of 1.85% throughout 2024 and 2025. The index achieved its maximum historical performance of 2.47% twice, first in October 2024 and again in July 2025. This historical context emphasizes that the state has successfully elevated its baseline over the five-year span, keeping the vast majority of its monthly ratings securely within the premium A and B grade bands.

Achieving higher scores and top-tier grades like A+ yields substantial positive outcomes for the regional economy. An elevated index score indicates a highly active and successful innovation ecosystem characterized by heavy venture capital investment, high rates of commercialization, and strong corporate-academic partnerships. These favorable metrics create a compounding effect that boosts investor confidence, fosters an environment ripe for high-tech business creation, and drives job growth. Ultimately, a higher grade reinforces North Carolina’s position as a leading national hub for technology and research, attracting elite talent and sustaining long-term economic prosperity.

Conversely, lower scores and depressed ratings carry serious negative implications for the state’s economic momentum. When the index declines, as seen during the late 2021 contraction or the temporary contractions to 1.51% in early 2026, it often signals underlying friction such as capital constraints, regulatory hurdles, or a slowdown in research outputs. Prolonged periods of lower scores can erode the state’s competitive edge, making it more difficult to secure crucial funding for early-stage ventures. Furthermore, a weakening index risks a drain of skilled technical talent to more dynamic markets, which can stall local industrial growth and delay the introduction of transformative regional technologies.

Discussion:

In May, the North Carolina inventionINDEX scored a positive sentiment which was lower than the previous year’s average but outperformed the downward trend for the year. This is in contrast to the prior 12 months, which experienced a slight upward 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 North Carolina office provides R&D tax credit consulting and advisory services to Charlotte, Raleigh, Greensboro, Durham, Winston Salem, Fayetteville, Cary, Wilmington, High Point, Greenville, Asheville, Concord, Gastonia, Jacksonville, Chapel Hill, Rocky Mount, Huntersville, Burlington, Wilson and Kannapolis.

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.