Massachusetts R&D Tax Credit Benefits for Corporations

Massachusetts and the R&D Tax Credit

State Credit Name: Massachusetts Research Credit

Expiration Date: Indefinite

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

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.

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Special Notes: 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. 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.

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.

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Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 6 Liberty Square, Boston, Massachusetts provides R&D tax credit consulting and advisory services to Boston, Worcester, Springfield, Lowell, Cambridge, New Bedford, Brockton, Quincy, Lynn and Fall River.

If you have any questions or need further assistance, please call or email our local Massachusetts Partner on (857) 347-5915.
Feel free to book a quick teleconference with one of our Massachusetts R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

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Massachusetts R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Massachusetts, businesses must identify their qualified research activities (QRAs) and calculate the credit amount. The Massachusetts R&D tax credit closely mirrors the federal Section 41 credit, but with specific state requirements, such as the research being conducted within Massachusetts. Businesses can generally calculate the credit as 10% of their current-year Massachusetts Qualified Research Expenses (QREs), or they may elect an alternative simplified method based on a percentage of QREs exceeding a base amount derived from prior years’ expenses. Once the credit is calculated, it must be filed with the business’s Massachusetts corporate or personal income tax return, depending on the business structure. The specific form required to make the Massachusetts R&D tax credit claim is Massachusetts Schedule RC, Research Credit. Unused credits can typically be carried forward for up to 15 years.

R&D Tax Credit Training for MA CPAs

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R&D Tax Credit Training for MA CFPs

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R&D Tax Credit Training for MA SMBs

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Massachusetts Patent of the Year – 2024/2025

Unruly Studios Inc. has been awarded the 2024/2025 Patent of the Year for their innovative approach to interactive learning. Their invention, detailed in U.S. Patent No. 12097424, titled ‘System of distributed interactive objects’, introduces a modular, programmable interface that transforms physical spaces into dynamic learning environments.

The system comprises individual tiles equipped with sensors, lights, and speakers, which communicate wirelessly with a computational device. Users can arrange these tiles across various surfaces – floors, walls, or ceilings – to create interactive setups. The tiles respond to pressure, touch, and motion, enabling users to program them for games, educational activities, and physical exercises.

Designed with accessibility in mind, the system supports voice commands and is compatible with devices like smartphones, tablets, and smart TVs. Its modular nature allows for scalable setups, accommodating both individual and group play. This innovation bridges the gap between digital and physical learning, encouraging movement, collaboration, and creativity in educational settings.

Unruly Studios Inc.’s invention marks a significant advancement in interactive learning technology, offering a versatile tool that adapts to various educational needs and environments.