Louisiana R&D Tax Credit

Louisiana has long been known for its rich culture and history. Now, it’s also becoming a leader in innovation. As a result, this state has some of the most generous tax incentives for R&D. For this reason, companies looking to invest in development or hire top talent in the area should consider the Louisiana research and development tax credit.

Louisiana Research Tax Credit

Louisiana R&D tax credit tries to motivate businesses to start or continue R&D activities in the state with a tax credit of up to 30% on qualified research expenditures (QREs). The credit has no minimum requirement and no cap. However, businesses that want to apply must first fulfill certain requirements. You also have to claim the expenses within one year of the tax period (after December 31).

The Process

You must submit an online application for the Louisiana research and development tax credit and pay a fee. However, before claiming the credit, you first need to apply for and receive credit certification from the LED Secretary.

Furthermore, every year before credit is issued, the Secretary conducts a thorough review of at least 10% of all applications submitted. LED then chooses audit applications based on a business sector, random sampling, or other criteria.

Who Cannot Qualify for the Louisiana R&D Tax Credit

Businesses providing professional services (such as engineering or architecture) without an American patent (either pending or granted) relating to the QREs in question can’t take part in the Louisiana tax incentive. Likewise, companies specializing in custom fabrication and production that do not already own a United States patent that covers the QREs in question do not qualify. That is unless LED explicitly invites them.

How to Calculate Louisiana Research Tax Credit

The Louisiana tax credit depends on the number of employees your company hires in the state.

• For companies that employ less than 50 workers, the credit amount is 30% of the difference between the QREs for the past taxable year and the base amount.

• For companies employing anywhere between 50 and 99 workers, the credit amount is 10% of the difference between the QREs for the past taxable year and the base amount.

• For companies that employ 100 or more workers, the credit amount is 5% of the difference between the QREs for the past taxable year and the base amount.

Louisiana Research and Development Tax Credit: Takeaway

Louisiana Provides a tax credit of up to 30% on QREs without a minimum requirement or cap. If you get it, you file or amend your state income tax return and claim the tax credits.

FAQs

What kind of companies can apply for an R&D tax credit in Louisiana?

Partnerships, LLCs, S-Corporations, C-Corporations

What is the deadline for applying for an R&D tax credit in Louisiana?

You must submit your application with your Louisiana Tax Return.

What data do I need to calculate credit an R&D tax credit in Louisiana?

Claim period Federal QREs (Qualified R&D Expenses)

What information do I need to provide to file an R&D tax credit in Louisiana?

Louisiana QREs for the past three years, as well as the number of Louisiana employees.

Is credit carryforward an option in Louisiana?

Yes, up to five years.