Minnesota R&D Tax Credit Changes
Posted 4-9-2010 | By Gloria McDonnell | Download Article
Governor Tim Pawlenty signed into law a package of tax incentives designed to create jobs in Minnesota. One of the tax incentives included in the Minn. Jobs bill is enhancements to the research and development (R&D) tax credit. Below is a summary of the R&D tax credit changes effective for tax years starting after 12/31//09:
- The R&D tax credit rate will increase from 5 percent to 10 percent of R&D expenses.
- Until now, the R&D tax credit was only available to C Corporations in Minnesota. With the signing of the bill, S Corporations, partnerships, and LLCs performing R&D in Minnesota now have the opportunity to claim a federal and state credit.
- The R&D tax credit is now refundable rather than limited to tax liability. For tax years starting after 12/31/09, if the R&D credit generated in the tax year exceeds the tax liability for the tax year, the excess credit will be refundable. This is good news for the many companies suffering losses due to the economy, but still incurring R&D expenditures. The credits can now be refunded rather than carried forward to offset tax liabilities in future tax years.
For more information, please contact Gloria McDonnell, CPA, at gmcdonnell@hlbtr.com or 651-407-5829.