Michigan Research and Development Tax Credit Summary
Michigan offers a research and development tax credit for qualified research conducted in the state of Michigan. The Michigan R&D credit leverages off of the federal Section 41 rules surrounding credits for increasing research activities.
- Governed by Section 208.1405 of Michigan Compiled Law.
- Credit amount is equal to 1.9% of a taxpayer’s research and development expenditures within the state of Michigan beginning for tax years 2009 and thereafter.
- Credit amount is 1.52% for the 2008 tax year.
- R&D expenditures are defined by IRC section 41(b) of the federal code.
- The R&D credit combined with other Section 403 credits cannot exceed 65% of a taxpayer’s liability.
- Unused credits are extinguished and cannot be carried forward.
Michigan R&D Tax Credit Case Study
A car parts manufacturer has been claiming the R&D credit for years. The company claims R&D credits each year for the development activities of its engineers. This project involved a multi-year study covering the tax years 2011 – 2014. The Company qualified for the federal R&D Tax Credit of $243,367 and an additional $55,670 of state R&D Tax Credit in Michigan . Summary of credits:
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