Vermont R&D Tax Credit

The ability to innovate is an important component of any company’s success. That is why many businesses choose to invest in R&D projects. The good news is that plenty of tax credits are available to companies that fund R&D projects.

The Vermont Department of Taxes introduced the Vermont R&D tax credit to encourage businesses to perform more research activities within the state. Discover more details about this incentive to learn whether your company qualifies.

Vermont Research and Development Tax Credit Explained

The state offers an R&D credit equivalent to 27% of the federal tax credit for the taxable year. However, in order to apply, your company must conduct QREs as defined under IRC § 41 in Vermont. According to this system, you must first claim the federal R&D tax credit for the same tax year.

Furthermore, your credit amount will be split if you have expenditures in other states that were included in the federal computation. In other words, the Vermont incentive will cover only those expenditures you incurred for research activities within the state. You can use it against corporate, business, or personal income tax.

How to Calculate Vermont Research Tax Credit

Vermont research tax credit equals 27% of the federal tax credit for Vermont QREs.

Vermont Research and Development Tax Credit: Takeaway

To be eligible for the Vermont R&D tax credit, you must first claim the federal R&D tax credit. After claiming the federal incentive, you’ll be able to compute the amount of its Vermont counterpart.

FAQs

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

Partnerships, LLCs, S-Corporations, C-Corporations

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

You must submit your application together with the Vermont Tax Return.

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

Claim period QREs (Qualified R&D Expenses)

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

Federal Form 6765

Is credit carryforward an option in Vermont?

Yes, up to ten years.