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).

Texas inventionINDEX Scores – Last 12 months

The current inventionINDEX score for February 2026 stands at 1.15 percent with a B rating, marking a modest improvement over the 1.13 percent recorded in January 2026. This performance reflects a stabilization of the index after a slightly more volatile period in late 2025, where scores fluctuated between 1.15 percent and 1.20 percent. When compared to the broader sixty-month historical window, the current score resides near the median. While it does not reach the historical peaks seen in August 2023 at 1.48 percent or November 2022 at 1.43 percent, it remains well above the lower thresholds experienced in late 2021 when the index dipped to 1.04 percent. The data suggest a consistent baseline of activity in the Texas invention landscape that avoids the deeper troughs of previous years.

A higher inventionINDEX score, particularly those reaching the A and A+ categories, serves as a vital indicator of robust economic vitality and forward-looking industrial growth. When the score climbs toward the 1.40 percent range, it typically signifies an environment rich in intellectual property development, increased venture capital interest, and a high rate of patenting activity. These elevated grades suggest that the state is successfully translating research and development into tangible commercial assets, which in turn attracts high-tier talent and fosters a competitive edge in global markets. A strong score functions as a beacon for investors, signaling that the regional ecosystem is optimized for breakthrough discoveries and sustainable technological advancement.

Conversely, a lower score or a downward trend in ratings, such as the C and B- grades seen sporadically throughout the last five years, carries several negative implications for the regional economy. When the index falls toward the 1.04 percent level, it often points to a stagnation in creative output or a bottleneck in the transition from conceptualization to market-ready innovation. These lower figures can result in reduced investor confidence and a potential brain drain as top-tier researchers and entrepreneurs seek more active ecosystems elsewhere. Furthermore, a sustained period of lower scores can lead to a loss of market share in key sectors like energy, aerospace, and biotechnology, as competitors outpace the region in bringing new solutions to the forefront.

Over the sixty-month duration, the Texas inventionINDEX demonstrates a resilient yet cyclical pattern of growth and recalibration. The transition from the 1.17 percent ratings seen in early 2021 to the more frequent A+ spikes in 2023 and 2024 illustrates an evolving infrastructure capable of high-level performance. However, the frequent return to the B range, including the most recent February 2026 data, indicates that maintaining peak innovation levels requires continuous investment and strategic support. Moving forward, the goal for the region remains to push these scores back toward the A-range benchmarks, ensuring that the momentum of the past five years is not lost to volatility but is instead harnessed for long-term economic leadership.

Discussion:

In February, the Texas 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 Texas office provides R&D tax credit consulting and advisory services to Houston, San Antonio, Dallas, Austin, Fort Worth, El Paso, Arlington, Corpus Christi, Plano, Laredo, Lubbock, Garland, Irving, Amarillo, Grand Prairie, Brownsville, McKinney, Frisco, Pasadena and Mesquite.

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.