Nebraska R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Nebraska, businesses must first incur research and experimental (R&D) expenditures within the state, as defined by Internal Revenue Code (IRC) § 174, and generally claim the federal R&D tax credit. The Nebraska R&D tax credit is typically a percentage of the federal credit allowed. Businesses then claim the credit on their Nebraska tax return by completing Form 3800N, Nebraska Incentives Credit Computation, and its accompanying worksheet, Form 3800N Worksheet RD, Research Tax Credit Worksheet. This form and worksheet are submitted along with the taxpayer’s Nebraska income tax return. The credit can be used to reduce income tax liability or, in some cases, obtain a refund of state sales and use taxes paid. Businesses that conduct R&D activities on a college or university campus in Nebraska may qualify for an enhanced credit rate. It is also important to note that businesses claiming the credit must electronically verify the work eligibility status of all newly-hired employees in Nebraska during the tax year in which the credit is claimed.