July 2025: 1.35% (A- grade)

Massachusetts inventionINDEX July 2025: 1.35% (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).

Massachusetts inventionINDEX Scores – Last 12 months

The inventionINDEX for July 2025 stands at 1.35%, earning an A- rating. This score represents a notable recovery from the prior month’s C+ rating of 1.11% and positions the state back in line with its more robust historical performance. Over the past five years, the index has experienced significant fluctuations, reaching highs of 1.92% in October 2023 and 1.63% in May 2022, both with an A+ rating. While the most recent score does not reach these peaks, it is well above the lowest points, such as the 1.07% C+ rating in September 2023. This demonstrates a resilient and often strong performance, with the state consistently achieving B, A, and A+ ratings, indicating a generally healthy and innovative economic environment.

A consistently high inventionINDEX score and rating, such as an A or A+, signifies a flourishing ecosystem of innovation and economic vitality. A higher score typically reflects a strong pipeline of new patents, a dynamic startup culture, and robust investment in research and development. This positive climate can attract further venture capital and top-tier talent, creating a virtuous cycle of growth. For the state, this leads to job creation, increased tax revenues, and the establishment of a global reputation as a hub of technological and scientific progress. The exceptional A+ ratings seen in months like December 2024 and February 2023 likely correspond to periods of particularly strong economic performance and innovation output.

Conversely, a lower inventionINDEX score and a C or B- rating can signal potential challenges within the state’s innovation economy. A dip in the score might indicate a slowdown in patent filings, a decrease in new business formation, or a reduction in public and private funding for research. The C+ ratings, such as those in June 2025 and September 2023, could serve as a warning sign for policymakers and business leaders to examine the underlying causes. These downturns can result in a loss of competitive advantage, a potential outflow of talent, and a less attractive environment for new investment, which could hinder long-term economic prospects.

In summary, the Massachusetts inventionINDEX table shows a dynamic landscape of innovation, characterized by strong periods of growth punctuated by occasional downturns. The July 2025 score of 1.35% is a positive sign, indicating a return to a healthy A- rating. This recovery is a testament to the state’s enduring capacity for innovation. While the peaks are impressive, the ability to rebound from lower scores is equally important, highlighting the resilience of the state’s economic and research sectors. Maintaining a focus on the factors that drive these higher scores will be essential for ensuring continued prosperity and cementing Massachusetts’ position as a leader in innovation.

Discussion:

In July, the Massachusetts inventionINDEX scored a positive sentiment which was higher than the previous year’s average and 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 Massachusetts office provides R&D tax credit consulting and advisory services to Boston, Worcester, Springfield, Lowell, Cambridge, New Bedford, Brockton, Quincy, Lynn and Fall River.

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.

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