Massachusetts

State Credit Name: Massachusetts Research Credit

Expiration Date: Indefinite

Who Can Apply? Corporations and flow-through entities, but with limitations.

  • An S-corporation can apply the research credit against its excise tax liability, but may not share any excess credit with its shareholders.
  • For flow-through entities (i.e. partnerships, trusts, sole traders, joint ventures), the credits that are paid or received by such entities must be attributed to the owners of the entities and be taken into account in determining the credit for the taxable year during which the taxable year of the unincorporated flow-through entity ends.

Credit Carry Forward: A corporation may carry forward for a limitless period of time any part of the credit that is prohibited under the 75% limitation. Any credits prohibited that are not unlimited status, can be carried forward 15 years.

About the Credit: The Massachusetts state credit closely follows the federal R&D credit. It is equal to the sum of 15% the cumulative basic research payments and 10% of the cumulative QRE’s. If the taxpayer did not have QRE’s in any of the 3 taxable years prior to the tax year for which the credit is being filed, the amount of the credit is equal to 5% of the taxpayer’s QRE’s for the current year.  

Notes: The credit is limited to 100% of the corporation’s first $25,000 of excise tax due and 75% of such liability over $25,000. The credit cannot decrease the tax liability below $456.

Click here to find out if you qualify for the federal research credit.

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(281) 899-0056

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