Vermont's R&D credit is 27% of your federal credit, 75% from 2027.

Rate	27% of the federal Section 41 credit; 75% for tax years beginning on or after Jan. 1, 2027
Refundable	No
Carryforward	10 years
Form	Schedule BA-404 (business) or IN-119 (individual)
Statute	32 V.S.A. 5930ii, as amended by 2026 Act 164

The credit is a percentage of the federal research credit, narrowed to Vermont. The mechanics:

• Rate. 27 percent of the federal Section 41 credit allowed for eligible research and development expenditures made within Vermont, for tax years beginning before January 1, 2027. 2026 Act 164 (H.933), signed June 18, 2026, raises the rate to 75 percent for tax years beginning on or after January 1, 2027. The online statute still shows 27 percent because Act 164 is not yet codified.
• It piggybacks on the federal credit. There is no separate Vermont base amount. The Vermont credit is a percentage of the federal credit attributable to Vermont research (27 percent, then 75 percent from 2027), which makes it simple to compute once the federal number is set.
• Vermont-only. Only research and development expenditures made within Vermont count toward the credit, even where the federal definition would include work done elsewhere.
• Same expense definition as federal. The credit rests on the federal Section 41 credit, so the qualified research that supports your federal claim supports the Vermont credit, limited to the Vermont-performed portion.
• Nonrefundable, with carryforward. The credit offsets Vermont tax. It is not refundable, but unused credit carries forward for up to 10 years.
• Public disclosure. Each year, by January 15, the Vermont Department of Taxes publishes the names of taxpayers who claimed the credit. It is worth knowing that claiming the credit is a matter of public record in Vermont.
• A related Section 174A change. Act 164 also decouples Vermont from federal Section 174A for tax years beginning on or after January 1, 2025, for taxpayers that fail the Section 448(c) gross-receipts test: they add back the 174A deduction and use pre-2025 Section 174 rules.

The credit is claimed under 32 V.S.A. section 5930ii on Schedule BA-404 with a business return, or Schedule IN-119 with an individual return.

R&D Binder produces federal Section 41 documentation from your GitHub commit history. The binder is what supports your federal Form 6765 and, starting tax year 2026, the Form 6765 Section G appendix (mandatory for non-exempt filers). Because Vermont's credit is a percentage of that federal credit, the binder is most of the Vermont work too.

The Vermont state credit workpaper is a $995 add-on to the standard binder engagement. It produces:

• The Vermont-eligible share of your federal Section 41 credit, tied to research conducted in Vermont, using the same business-component partition as the federal binder.
• The credit computed at the rate for the tax year: 27 percent of that Vermont-eligible federal credit, or 75 percent for tax years beginning on or after January 1, 2027.
• A usage note: the 10-year carryforward, so your CPA can plan how the credit is absorbed.
• Filing notes for your CPA: which Vermont return and schedule the credit attaches to, plus a note that Vermont publishes the names of credit claimants each year.

We do not file the Vermont return or sign it. That stays with your CPA, the same way federal Form 6765 does. R&D Binder produces the workpaper; your CPA files.

If you operate in more than one state, additional state workpapers are $995 each. Most states with an R&D credit track the federal QRE definition closely, so the marginal cost per state is low once the federal binder is complete.

A worked example. A Burlington SaaS company with 12 engineers, most of its research done in Vermont, and a federal Section 41 credit of $90,000 for the year computed on Form 6765.

• Federal Section 41 credit. The $90,000 federal credit is claimed by the CPA on Form 6765. R&D Binder produces the binder, QRE workpaper, and Form 6765 Section G appendix.
• Vermont credit. Say 75 percent of the research is conducted in Vermont, so the Vermont-eligible federal credit is about $67,500. For a tax year beginning before 2027, at 27 percent, the Vermont credit is roughly $18,000. For a tax year beginning on or after January 1, 2027, the same facts at 75 percent give about $50,625. No separate base calculation is needed; it is a percentage of the federal credit.
• Nonrefundable, carried forward. The credit offsets Vermont tax. A profitable company uses it; a pre-profit company carries the unused amount forward up to 10 years.
• Total engagement cost. SaaS Standard tier ($4,995, 6 to 25 FTE) plus the Vermont state workpaper add-on ($995). Total $5,990.

The federal credit amount and the Vermont share are specific to each company; the numbers above are illustrative. The CPA files both returns. R&D Binder never appears on the federal or Vermont return.

If the Vermont Department of Taxes examines a return on which the research credit was claimed, the substantiation expected is the same kind the IRS expects under federal Section 41: business-component identification, four-part-test rationale, contemporaneous evidence, and qualified research expense allocation, plus support that the research was conducted in Vermont. Because the Vermont credit rests directly on the federal credit, the federal binder is the core of the support. The Vermont workpaper adds the in-state portion.

Our standard scope ends at delivering the binder and the state workpaper. Audit-defense engagement for a Vermont Department of Taxes examination is a separate scope at $250 per hour, scoped per incident. We do not represent before the Department; that remains your CPA's responsibility or your tax controversy attorney's.

• 2026 Act 164 (H.933), section 58, signed June 18, 2026, which amends 32 V.S.A. section 5930ii to set the credit at 27 percent of the federal credit for tax years beginning before January 1, 2027 and 75 percent for tax years beginning on or after that date, and which decouples Vermont from Section 174A for taxpayers that fail the Section 448(c) gross-receipts test. Act 164 as enacted; H.933 bill status.
• Downs Rachlin Martin, Final Vermont legislative update (June 11, 2026).
• 32 V.S.A. section 5930ii (Research and development tax credit), the 27 percent rate tied to the federal Section 41 credit for research made within Vermont (as codified before Act 164), the 10-year carryforward, and the annual publication of claimant names by January 15. Vermont General Assembly.
• Vermont Department of Taxes, 2025 Schedule BA-404 instructions. The credit is claimed on Schedule BA-404 (business returns) or Schedule IN-119 (individual returns).
• IRS Form 6765 (federal Credit for Increasing Research Activities) and Internal Revenue Code Section 41, the federal credit Vermont's credit is a percentage of.

This page is general informational content, not tax advice for any specific taxpayer. The Vermont credit is administered by the Vermont Department of Taxes. The rate, the carryforward, and the public-disclosure requirement reflect 32 V.S.A. section 5930ii and 2026 Act 164 as of September 2026. Act 164 is not yet codified in the online statute; confirm the rate for your tax year with your CPA or the Department before filing.

• Vermont R&D credit rate
• Vermont vs the federal credit
• Vermont R&D credit carryforward
• The Section 41 four-part test
• What is a qualified research expense (QRE)?
• Form 6765 and Section G
• Arizona R&D credit
• California R&D credit
• Idaho R&D credit
• Illinois R&D credit