May 2026: 1.15% (B grade)

Texas inventionINDEX May 2026: 1.15% (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).

Texas inventionINDEX Scores – Last 12 months

The Texas inventionINDEX recorded a score of 1.15% with a “B” rating for May 2026, marking a slight recovery from the previous month where the index fell to 1.11% with a “B-” rating. While this uptick indicates a brief reversal of the downward movement observed in early spring, the current figures remain below the historical benchmarks established earlier in the year, such as the 1.25% score and “A” rating achieved in March 2026. Looking at the broader trajectory, the current score sits below the 60-month historical average of approximately 1.21%. This placement suggests that while the state’s innovation ecosystem is maintaining a stable baseline, it is currently operating under a period of moderate deceleration compared to its long-term performance.

Evaluating the historical dataset over the last 60 months reveals significant volatility and distinct cycles within the Texas innovation landscape. The index reached its absolute pinnacle in August 2023, peaking at 1.48% with an “A+” rating, a period characterized by consecutive months of high performance throughout late 2022 and 2023. Conversely, the lowest point in the 60-month window occurred in October 2021, when the index bottomed out at 1.04% with a “C” rating. When comparing May 2026 to these historical extremes, it is evident that the current climate avoids the severe stagnation observed in late 2021 but fails to capture the aggressive growth momentum that dominated the 2023 calendar year, indicating a transition into a more conservative phase of economic and technological output.

A higher inventionINDEX score and corresponding top-tier grades, such as the “A” or “A+” ratings frequently seen in previous years, yield substantial benefits for the regional economy. Elevated scores indicate robust patent activity, intense research and development expansion, and heightened entrepreneurial confidence across key technology sectors. These positive outcomes foster an attractive environment for venture capital injection, as investors actively seek out regions with thriving creative pipelines. Furthermore, strong innovation performance correlates with high-value job creation, retention of top academic talent, and enhanced global competitiveness, ultimately cementing the state’s reputation as a premier hub for technological advancement and industrial leadership.

On the other hand, a declining score and lower grade implications pose notable challenges for the state’s economic resilience. When the index contracts toward the “B-” or “C” thresholds, it serves as an early indicator of underlying systemic frictions, such as reduced corporate capital expenditure, supply chain disruptions in tech sectors, or bureaucratic hurdles in intellectual property commercialization. The negative implications of prolonged lower scores include diminished market competitiveness, potential capital flight to more dynamic regions, and a slowdown in the translation of academic research into commercially viable products. Consequently, these downward shifts underscore the necessity for stakeholders and policymakers to closely monitor the index, allowing them to proactively deploy strategic interventions, enhance public-private partnerships, and fortify the foundational pillars of the innovation economy.

Discussion:

In May, the Texas 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 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. 

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