Rhode Island Research and Development Tax Credit Summary

The Rhode Island R&D Tax Credit allows a taxpayer who makes qualified research expenses (QREs) in Rhode Island to claim an income tax credit. Here is a summary of the credit:

  • The credit is 22.5% for QREs up to $111,111 and 16.9% for the remaining QREs, which exceed the base period expenses.
  • QREs and base period expenses have the same meaning as defined in IRC Section 41, provided that such expenses were incurred after July 1, 1994.
  • The credit is applied to 50% of the tax due; after all other credits available have been used.
  • The credit is available to corporations, individuals, partnerships and S corporations.
  • Any unused credit may be carried forward up to 7 years.

Rhode Island R&D Tax Credit Case Study

A Providence company designs and manufactures medical instruments for the health services 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 $204,167 and an additional $271,347 in Rhode Island state R&D Tax Credits. Summary of credits:

FEDERAL RHODE ISLAND
Year Total QREs Credit Total QREs Credit
2014 $700,000 $56,000 $700,000 $73,822
2013 650,000 52,500 650,000 69,597
2012 600,000 49,000 600,000 65,372
2011 550,000 46,667 550,000 62,556
Total $2,500,000 $204,167 $2,500,000 $271,347

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