MINNESOTA INVENTIONINDEX | DECEMBER 2025

December 2025: 1.86% (A- grade)

Minnesota inventionINDEX December 2025: 1.86% (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).

Minnesota inventionINDEX Scores – Last 12 months

The December 2025 inventionINDEX score of 1.86% represents a notable recovery and a stabilizing trend as Minnesota concludes a five-year economic cycle. This A- rating marks an improvement over the preceding two months, where scores dipped as low as 1.46% in October. When viewed against the broader 60-month horizon, the current figure sits comfortably above the historical median, showing a resilient bounce-back from the significant volatility experienced in 2023. The data suggests that while the index frequently fluctuates, the state has maintained a consistent ability to return to high-performing tiers after periods of contraction.

A higher grade on the inventionINDEX, such as the peak of 2.59% reached in July 2025, yields substantial benefits for the regional economy. These high scores, typically in the A and A+ range, indicate a robust environment for intellectual property development and technological breakthroughs. Such performance often attracts increased venture capital, encourages high-tech startups to plant roots in the state, and signals to the global market that Minnesota is a leader in research and development. This elevated innovation activity serves as a primary driver for high-wage job creation and ensures that the state remains at the forefront of emerging industries.

In contrast, lower scores like the 0.91% recorded in April 2023 present significant challenges and negative implications for the state’s growth. Ratings in the C range often reflect a cooling of the innovation pipeline, which can stem from reduced research funding, regulatory hurdles, or a temporary decline in patent applications. These lower marks serve as a warning of potential stagnation, suggesting that the state may be losing its competitive edge to other regions. If sustained, a low inventionINDEX score can lead to a talent drain, as researchers and entrepreneurs seek more active ecosystems, eventually resulting in a slower pace of overall economic expansion.

An analysis of the full five-year trajectory reveals an innovation landscape that is dynamic and responsive to broader market shifts. The move from a baseline of 2.20% in late 2020 to the current 1.86% demonstrates that while the index has faced periods of decline, the foundational infrastructure for invention in Minnesota remains strong. The recovery observed in the final quarter of 2025 provides a positive outlook for the coming year, suggesting that strategic investments in technology and education continue to pay dividends. Maintaining this momentum will be critical for fostering a sustainable economic environment that consistently rewards creativity and scientific advancement.

Discussion:

In December, the Minnesota inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a 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 Minnesota office provides R&D tax credit consulting and advisory services to Minneapolis, Saint Paul, Rochester, Duluth, Bloomington, Brooklyn Park, Plymouth, Maple Grove, Woodbury, and St Cloud.

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.