Delaware R&D Tax Credit Summary
Delaware companies can receive a tax credit for all eligible spending on research and development activities conducted in the state. Companies use federal R&D tax credit guidelines to determine whether their activities qualify for a tax credit. Any R&D activity conducted in Delaware that qualifies for a federal tax credit automatically qualifies for Delaware’s credit.
Delaware R&D Tax Credit Summary:
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For businesses with revenue of more than $20 million:
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10% of the excess of the taxpayer’s total Delaware QREs for the taxable year over the base amount; or
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50% of Delaware's apportioned share of the taxpayer's federal R&D Tax Credit, calculated using the alternative simplified credit method under IRC Sec. 41(c)(5).
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For Small Businesses with revenue less than $20 million:
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20% of the excess of the taxpayer’s total Delaware QREs for the taxable year over the base amount; or
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100% of Delaware’s apportioned share of the taxpayer’s federal research and development tax credit calculated using the alternative simplified credit method under IRC Sec. 41(c)(5).
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For purposes of the credit, a "small business" means any taxpayer with average annual gross receipts of $20 million or less.
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R&D Credit Refundable: Yes
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Prior to 2017, a maximum of $5 million in credits could be awarded in each year to all companies, and the value of the credit was limited to 50% of the tax liability imposed in the year. Previously whenever statewide applications exceed $5 million, R&D tax credits are pro ratad accordingly.
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Recent legislation removed both of these limitations beginning January 1, 2017.
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Because the cap has been eliminated, companies may receive 100 percent of the expected credit. In addition, the legislation made the credit fully refundable. So even if your company is not yet generating a profit, you can benefit from the credit.
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Delaware is the only state in the country that combines a zero-expenditure cap and refundable tax credit.
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Credit Carryforward: Unused credits may not be carried back, but may be carried forward 15 years.
Eligible Entities: C-Corporations, S-Corporations, LLCs, Partnerships.
Deadline for Tax Filing: Application due by 9/15 on Form 2070AC.
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Eligible taxpayers must submit a research and development credit application to the Division of Revenue on Form 2070AC by September 15 after the end of the taxable year during which the R&D expenses were made. A copy of the federal research credit Form 6765 must be attached to the application.
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After receiving approval for the credit, the taxpayer must complete Form 700 the Delaware Income Tax Credit Schedule. Both the credit application and the credit schedule must be attached to the taxpayer's Delaware corporation income tax return.
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Apply for the federal R&D tax credit, and submit the federal approval to Delaware for automatic approval of the State tax credit.
Data Required to Compute Credit
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Claim Period Qualified R&D Expenses (QREs)
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QREs for Prior 4 Years
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Gross Receipts for Prior 4 Years
Important Links and Forms: