Utah R&D Tax Credit

The Utah research and development tax credit is a reimbursement program that helps businesses reduce the cost of new product development. To qualify, your company must develop or improve a product, service, process, or device intending to sell it to others in an unrelated market.

Utah Research Tax Credit Explained

The state provides Utah R&D tax credit that mirrors IRC Section 41 to companies conducting research activities in the area. This credit is a non-refundable permanent state incentive that can’t expire.

Compute the amount in the following way. Calculate 5% of excess QREs for your research activities in Utah over a comparative base amount. Then add 5% of specific excess costs paid to a qualifying organization for basic research carried out in the state over a comparative base amount. Finally, add the sum to 7.5% of your Utah QREs for the current fiscal year.

The base amount is described in IRC Section 41 (c) and (h). That said, there are some differences between the three expenses mentioned above regarding the R&D credit carryforward.

• 5% of excess QREs for your research activities carried out in Utah over a comparative base amount — you can carry forward this expense as credit for up to fourteen years;

• 5% of specific excess costs paid to a qualifying organization for basic research carried out in the state over a comparative base amount — you can carry forward this expense as credit for up to fourteen years;

• 5% of your Utah QREs for the current fiscal year — carryforward is not an option.

The Process

Submit the final amount on Form TC-40A (Part 4 — using code 12), and make sure to store all relevant paperwork with your records.

How to Calculate Utah Research Tax Credit

Add 5% of the excess Utah QREs over the base amount, and 5% of excess costs paid to a qualifying organization for basic research activities carried out in the state over the base amount to 7.5% of Utah QREs of the taxable year.

Utah Research and Development Tax Credit: Takeaway

Utah R&D tax credit is a non-refundable incentive you can use to cover research costs. The credit mirrors the federal tax credit, but you can claim it only for activities conducted in the state.

FAQs

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

Partnerships, LLCs, S-Corporations, C-Corporations

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

You must submit your application with the Utah Tax Return.

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

Utah gross receipts for the past four years as well as claim period Utah QREs.

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

Utah gross receipts for the past four years, as well as Utah QREs for the past three years.

Is credit carryforward an option in Utah?

Yes, up to fourteen years for comparative credits. However, carryback is not an option.