State R&D credits, state by state
Many states stack their own research credit on top of the federal one. Each guide pairs the state rules with the federal Section 41 work R&D Binder already produces.
- Arizona - 24 percent on the first $2.5M of QRE above the base plus 15 percent on the excess. Nonrefundable for tax years beginning in 2026 and later, after HB 4168 ended the 75 percent small-business refund; unused credit carries forward 10 years.
- California - 15 percent regular credit or 3 percent ASC after SB 711 (2025), which repealed the Alternative Incremental Method. Unused credit carries forward indefinitely, and a $5 million annual cap on business credits applies through tax years beginning before 2030.
- Connecticut - Two stacked credits: 20 percent incremental plus a flat 6 percent non-incremental for companies at $100 million gross income or less. Companies at $70 million or less can exchange credits for 65 percent cash.
- Delaware - Fully refundable: 10 percent of the increase in Delaware research over a base, or 50 percent of the Delaware-apportioned federal credit (doubled to 20/100 percent for small businesses). For research conducted in Delaware, not where you are incorporated. 30 Del. C. 2070-2073; Form BUS-RDC, filed and approved by September 15.
- Georgia - 10 percent of incremental QRE over a Georgia gross-receipts base, capped at 50 percent of Georgia income tax, with excess usable against payroll withholding. The federal Section 41 credit must be claimed and allowed first.
- Idaho - 5 percent of the increase in Idaho QRE over a base, plus 5 percent of basic research payments, for research conducted in Idaho. Nonrefundable, 14-year carryforward (one of the longest). Idaho Code 63-3029G; Form 67.
- Illinois - 6.5 percent of the increase in Illinois QRE over a three-year average base, non-refundable, five-year carryforward, now authorized through tax years ending before January 1, 2037.
- Indiana - 15 percent of the increase in Indiana QRE over a base on the first $1 million of the increase, 10 percent above, for research conducted in Indiana. Nonrefundable, 10-year carryforward, no carryback. An alternative 10 percent method is available. Schedule IT-20REC.
- Iowa - Senate File 657 replaced the Research Activities Credit with an application-based IEDA program for tax years beginning in 2026: up to 3.5 percent of Iowa QRE, refundable, capped at $40 million statewide and allocated pro rata, limited to qualifying sectors, with an annual application and an independent CPA verification required.
- Maryland - 10 percent of QRE above the Maryland base, $250,000 per-applicant cap, refundable for small businesses, application due November 15. Authorized through tax year 2030.
- Massachusetts - 10 percent on incremental QRE plus 15 percent on basic research payments, with a 15-year carryforward.
- Michigan - A new refundable credit for 2025 expenses (Public Acts 186 and 187 of 2024): 3 percent of Michigan QRE up to a base plus 10 percent (250 or more employees, capped at $2 million) or 15 percent (fewer than 250, capped at $250,000) above the base, plus 5 percent for research-university collaboration. $100 million statewide cap; 2025 claims were prorated. Tentative claim for 2026 expenses due March 15, 2027.
- Minnesota - 10 percent of the first $2M of Minnesota QRE over a base, 4 percent above, now partially refundable under H.F. 9 (2025): a taxpayer may elect to cash out 19.2 percent of unused credit for tax year 2025 and 25 percent for 2026 and 2027. 15-year carryforward.
- Nebraska - The simplest to compute: 15 percent of your federal Section 41 credit (35 percent for university research), apportioned to Nebraska, with no separate state base. From July 1, 2026 it is no longer refundable against income tax, but it can refund Nebraska sales and use tax paid. Neb. Rev. Stat. 77-5801 to 77-5808; Form 3800N.
- New Jersey - 10 percent of in-state QRE over a base plus 10 percent of basic research payments, non-refundable, but unprofitable tech companies can sell unused credits and losses for cash through the NJEDA transfer program.
- North Dakota - 25 percent of the first $100,000 of the increase in North Dakota research over a base and 8 percent above, for research conducted in North Dakota. Nonrefundable but with a 3-year carryback and 15-year carryforward. N.D.C.C. 57-38-30.5.
- Pennsylvania - 20 percent for small businesses and 10 percent otherwise, with transferable (sellable) credits. Awards are prorated when requests exceed a $60 million annual cap.
- Rhode Island - 22.5 percent of the first $111,111 of qualifying research over a base (about $25,000 of credit) and 16.9 percent above, for research conducted in Rhode Island. Nonrefundable, limited to 50 percent of tax per year, 15-year carryforward for 2026 credits (7 years before). R.I. Gen. Laws 44-32-3.
- South Carolina - A flat 5 percent of qualified research expenses made in South Carolina, with no base subtraction (the federal credit must be claimed for the same year). Nonrefundable, limited to 50 percent of the tax left after other credits, 10-year carryforward. S.C. Code 12-6-3415; Schedule TC-18.
- Texas - 8.722 percent of Texas QRE above half the prior 3-year average (10.903 percent with a university research contract), under the new Subchapter T franchise tax credit. QREs must be reported on federal Form 6765.
- Vermont - 27 percent of the federal Section 41 credit for research conducted in Vermont, rising to 75 percent for tax years beginning on or after January 1, 2027 (2026 Act 164). Nonrefundable, 10-year carryforward; no separate state base. Vermont publishes claimant names annually. 32 V.S.A. 5930ii.
- Wisconsin - 5.75 percent of Wisconsin QRE exceeding 50 percent of the average for the prior 3 years (2.875 percent if no prior QRE), for research conducted in Wisconsin. Partly refundable, up to 25 percent for tax years beginning after December 31, 2023. 50-year carryforward (2025 Wisconsin Act 220); claimed on Schedule R.
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder; many state credits build directly on that same documentation.