Overview

Massachusetts offers a tax incentive for research and development investment for both manufacturers and R&D companies. This tax incentive was designed to
remove any obstacles to R&D investment and spur growth and innovation.

How It Works

The Massachusetts R&D Tax Credit is divided into two categories:

• The first credit category is designed for Qualified Expenses which are defined as any research expense incurred which would qualify for the Federal R&D tax credit. This credit is computed at 10%.
• The second credit is available to Basic Research Payments. Computed at 15%. This credit is available for any costs related to donations and contributions made to research organizations such as hospitals
  and universities.

Advantages

Although Massachusetts’ R&D tax credit closely parallels the federal credit program, it offers qualifying companies some unique features including:

• Massachusetts credit is permanent, while other states have temporary credits
• The R&D tax credit can be taken in conjunction with the state’s Investment Tax Credit of 3%
  (or 5% as part of the Economic Development Incentive Program).
• Unlike some of the other credits, the R&D tax credit may reduce the corporation’s tax to the minimum tax of $456.

Eligibility

The R&D tax credit is available to any foreign or domestic corporation subject to the corporate excise under Chapter 63 Massachusetts Laws.