PENNSYLVANIA INVENTIONINDEX | JANUARY 2026

January 2026: 1.04% (C+ grade)

Pennsylvania inventionINDEX January 2026: 1.04% (C+ 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).

Pennsylvania inventionINDEX Scores – Last 12 months

The Pennsylvania inventionINDEX for January 2026 stands at 1.04 percent, reflecting a rating of C plus. When viewed against the five-year historical trajectory, this figure represents a noticeable contraction from the performance levels observed in the preceding years. This current valuation is significantly lower than the 1.13 percent recorded in January 2025 and falls well below the five-year peak of 1.48 percent reached in September 2023. This latest score places the index near its historical floor, closely mirroring the low of 1.00 percent seen in November 2024, which suggests a period of cooling in the regional innovation landscape.

Analyzing the broader sixty-month dataset reveals a cyclical pattern of innovation activity characterized by periods of intense productivity followed by corrections. Throughout 2023 and early 2024, the state frequently achieved A plus ratings, with scores consistently hovering above the 1.20 percent threshold. These periods of high output demonstrate the state’s capacity for robust intellectual property development and creative momentum. However, the data from the latter half of 2025 into early 2026 indicates a downward shift. The transition from an A rating in December 2025 to a C plus in January 2026 highlights a rapid deceleration that warrants close attention from industry stakeholders and economic observers.

When the inventionINDEX reaches the higher echelons of the scale, such as the A and A plus ratings seen in mid-2025 and throughout 2023, the implications for Pennsylvania are overwhelmingly positive. High scores typically correlate with a surge in patent filings, increased research and development investment, and a flourishing ecosystem for startups and established technology firms. Such periods of excellence enhance the state’s competitive edge, attracting venture capital and high-tier talent. A strong rating serves as a beacon of economic health, signaling that the infrastructure for creativity and technological advancement is functioning at an optimal level.

Conversely, a lower score like the current 1.04 percent brings several negative implications to the forefront. A sustained dip in the index can indicate a slowdown in the translation of ideas into tangible assets, potentially leading to a loss in market share for regional industries. Lower ratings often reflect systemic hurdles, such as reduced funding, regulatory bottlenecks, or a decrease in collaborative synergy within the private and public sectors. Addressing these vulnerabilities is essential to reverse the current trend and restore the index to its previous highs. Moving forward, the focus must remain on revitalizing the factors that once drove the score toward the 1.48 percent mark to ensure long-term prosperity.

Discussion:

In January, the Pennsylvania 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 Pennsylvania office provides R&D tax credit consulting and advisory services to Philadelphia, Pittsburgh, Allentown, Erie, Reading, Scranton, Bethlehem, Lancaster, Harrisburg, Altoona, York, State College, Wilkes Barre, Chester, Williamsport, Easton, Lebanon, Hazleton, New Castle and Johnstown.

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.