Pennsylvania Research and Development Tax Credit Summary

The Pennsylvania research credit is very similar to the federal version including the definition of qualifying research. Below are some of the differences between the federal and Pennsylvania R&D Tax Credits.

  • Pennsylvania caps its total R&D Tax Credit at $55 million ($11 million set aside for qualified small businesses)
  • The credit rate in Pennsylvania is 10% (20% for qualified small businesses)
  • Pennsylvania offers a modified Alternative Simplified Credit
  • Qualified research must take place in Pennsylvania
  • Unused Pennsylvania research credits can be carried forward for fifteen years
  • Currently, there is no sunset provision for Pennsylvania’s R&D Tax Credit
  • Qualified taxpayers must submit an application to the Department of Revenue by September 15 for research expenses incurred to taxable year that ended in the prior calendar year

Pennsylvania R&D Tax Credit Case Study

A Philadelphia company manufactures components for the aerospace industry. The company claims R&D Tax 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 Credits of $359,917 and an additional $148,750 in Pennsylvania state R&D Tax Credits. Summary of credits:

FEDERAL
PENNSYLVANIA
Year
Total QREs
Credit
Total QREs
Credit
2014
$1,300,000
$135,333
$1,300,000
$65,000
2013
900,000
91,000
900,000
43,750
2012
650,000
63,000
650,000
27,500
2011
450,000
38,500
450,000
12,500
Total $3,300,000 $359,917 $3,300,000 $148,750

Proposal Request

Can you or your clients claim the R&D Tax Credit? The experts at KBKG can maximize and sustain your credits!