Short answer. Vermont's research credit is 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 under 2026 Act 164. There is no separate state base, the credit is non-refundable with a 10-year carryforward, and Vermont publishes the names of claimants each year.
Key facts
| Rate | 27% of the federal Section 41 credit; 75% for tax years from 2027 |
|---|---|
| Base | None (piggybacks the federal credit) |
| Refundable | No |
| Carryforward | 10 years |
| Form | Schedule BA-404 or IN-119 |
| Statute | 32 V.S.A. 5930ii, as amended by 2026 Act 164 |
27 percent of your federal credit, 75 percent from 2027
Vermont does not compute a separate credit; it takes a slice of your federal one.
The credit is 27 percent of the federal Section 41 credit allowed for research and development conducted in Vermont. There is no separate Vermont base amount to calculate. Once your federal credit is set, the Vermont credit is 27 percent of the portion attributable to Vermont research, which makes it one multiplication.
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. Only research and development performed within Vermont counts, even where the federal definition would reach work done elsewhere.
Non-refundable, with a 10-year carryforward
The rate offsets Vermont tax and banks what you cannot use.
The credit is non-refundable. It reduces Vermont tax, and any unused amount carries forward up to 10 years. The expense definition rests on federal Section 41, so the qualified research that supports your federal claim supports the Vermont credit, limited to the Vermont-performed portion. It is claimed under 32 V.S.A. 5930ii on Schedule BA-404 (business returns) or Schedule IN-119 (individual returns).
One quirk: it is public
Claiming the Vermont credit puts you on a published list.
Each year, by January 15, the Vermont Department of Taxes publishes the names of taxpayers who claimed the credit. It does not change the rate or the amount, but it is worth knowing that claiming the Vermont credit is a matter of public record.
More on Vermont's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- 32 V.S.A. 5930ii (research and development tax credit) - Vermont General Assembly
- Vermont 2026 Act 164 (H.933) as enacted, section 58 (amends 32 V.S.A. 5930ii) - Vermont Legislature
- Vermont H.933 (2026) bill status - Vermont Legislature
- Vermont Schedule BA-404 instructions (2025) - Vermont Department of Taxes
- Final Vermont legislative update (June 11, 2026) - Downs Rachlin Martin
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
- IRS, About Form 6765 - Internal Revenue Service
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder and the Vermont state workpaper from one engagement, both built to survive an exam.