Utah Research and Development Tax Credit Summary

The Utah R&D Tax Credit is a non-refundable tax credit available to taxpayers with qualifying research expenditures in Utah. The Utah R&D Tax Credit mirrors the federal Section 41 Credit for Increasing Research activities with a few exceptions. Below are some of the highlights of the Utah R&D Tax Credit:

  • The Utah R&D Tax Credit is permanent and does not expire.
  • The definition of qualifying research expenditures is the same as the federal Section 41 definition with the exception that only qualifying research expenses incurred in Utah may be captured towards the credit.
  • Gross receipts are only those attributable to sources within Utah.
  • The Utah research and development tax credit is the sum of:
    • 5% of a taxpayer’s qualified spending that exceed the base amount;
    • 5% of payments made to qualified organizations for basic research in Utah that exceed the base amount; and
    • 7.5% of qualified research expenses for the taxable year.
  • Credits that exceed a taxpayer’s tax liability may be carried forward for a period of 14 years.
  • Credits calculated using 7.5% of a taxpayer’s qualified research expenses may not be carried forward.

Utah R&D Tax Credit Case Study

A Utah based sporting goods manufacturer employs close to one hundred employees in its Salt Lake City offices. The Company has been claiming the research and development tax credit for many years for activities around the development and improvement of their sporting goods and protective wear. This project involved a multi-year study covering the tax years 2011 – 2014. The Company qualified for the federal R&D Tax Credits of $370,500 and an additional $383,760 in Utah State R&D Tax Credits.

FEDERAL UTAH
Year Total QREs Credit Total QREs Credit
2014 $1,100,000 $110,000 $1,100,000 $110,000
2013 950,000 95,000 950,000 95,000
2012 875,000 87,500 875,000 87,500
2011 780,000 78,000 780,000 91,260
Total $3,705,000 $370,500 $3,705,000 $383,760

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