TEXAS RESEARCH & DEVELOPMENT TAX CREDIT

Category: State

Administered by the Texas Comptroller of Public Accounts, this program reinstates franchise tax credits for companies conducting qualified research and development (R&D) activities within the state. The new law provides Texas companies the option of selecting either a sales tax exemption on property purchased by persons engaged in qualified research activities (QRAs) or the franchise tax credit, but not both. The effective date for the sales tax exemption is January 2014. The bill provides a sales tax exemption for property purchased, stored or used by a person engaged in qualified research. The property must be depreciable tangible personal property. The bill uses the definitions for “research” and “qualified research” that appear in federal tax law, except that these activities must occur within the state. A company conducting QRAs in Texas is eligible for a tax credit equal to 5% of the difference between a company’s qualified research expenses (QREs) during the tax year for which the credit is claimed and 50% of the average QREs for the three preceding tax years (base period). A company which has no QREs in one or more of the base period years may still claim the credit by selecting the reduced credit rate of 2.5% of credit year QREs.    Application Periods: Franchise tax forms are due July 15, 2021.  Sales tax forms are due:  90 days before making the project operational.    


Contacts

David McGlone
Texas Comptroller of Public Accounts
Phone: (512) 463-5254
david.mcglone@cpa.texas.gov
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