May 2026: 1.10% (B grade)

Pennsylvania inventionINDEX May 2026: 1.10% (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).

Pennsylvania inventionINDEX Scores – Last 12 months

The Pennsylvania inventionINDEX registered a score of 1.10% with a B rating in May 2026, showcasing a notable recovery from the 1.01% (C) recorded in April 2026. Despite this month-over-month rebound, the current mark sits slightly below the historical 60-month average of approximately 1.13%. This minor deficit indicates that while the state’s innovation framework is recovering from an early spring contraction, it continues to operate at a slightly more moderate pace compared to its long-term baseline. The upward movement from April to May illustrates a welcome stabilization in regional productivity, shifting the index away from low-tier ranges and safely back into its more typical middle-performance bands.

A deeper look at the historical timeline over the last five years reveals a remarkably stable and tight distribution of scores for Pennsylvania, avoiding the extreme volatility seen in many other regional markets. The index reached its absolute historical ceiling in September 2023, peaking at 1.48% with an A+ rating during a period of accelerated commercial growth. On the other end of the spectrum, the index hit its modern floor in November 2024, dipping to 1.00% with a C rating. Annual averages further highlight this operational consistency, hovering reliably between 1.11% and 1.15% from 2021 through 2025, before experiencing a minor compression to an average of 1.08% in the opening months of 2026. This tight historical variance points to an innovation pipeline that is structurally resilient and well-insulated from severe macroeconomic disruptions.

Achieving higher index scores and entering premium grade tiers, such as the recurring A and A+ ratings seen throughout 2023 and mid-2024, yields substantial positive outcomes for Pennsylvania’s broader economic ecosystem. A higher score reflects robust growth in patent generation, elevated corporate investments in research and development, and highly productive partnerships between major academic research institutions and local industries. These strong performances signal a healthy, predictable market, boosting regional investor confidence and attracting significant inflows of venture capital. Consequently, a premium grade fosters a flourishing environment that accelerates the launch of new tech ventures, stimulates high-wage employment opportunities, and helps the commonwealth retain elite scientific and engineering talent.

Conversely, lower index scores and depressed ratings carry serious negative implications for the state’s competitive positioning. When the index drifts toward the C or C+ thresholds, as observed in late 2021 and early 2026, it often indicates underlying bottlenecks such as regulatory delays, capital constraints, or a temporary slowdown in early-stage commercialization activity. A persistent decline in the index can dampen entrepreneurial momentum and cause out-of-state investors to adopt a more conservative, risk-averse posture toward localized startups. Furthermore, if the innovation environment remains stagnant over an extended period, Pennsylvania risks a migration of its skilled research and entrepreneurial talent to more aggressive tech hubs, ultimately limiting long-term industrial modernization and economic growth.

Discussion:

In May, the Pennsylvania inventionINDEX scored a positive sentiment which was lower than the previous year’s average but outperformed 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 Pennsylvania office provides R&D tax credit consulting and advisory services to Philadelphia, Pittsburgh, Allentown, Erie, Reading, Scranton, Bethlehem, Lancaster, Harrisburg, Altoona, York, State College, Wilkes Barre, Chester, Williamsport, Easton, Lebanon, Hazleton, New Castle and Johnstown.

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.