Idaho R&D Tax Credit Summary

 

The Idaho R&D Tax Credit allows a taxpayer who makes expenditures in research and development activities in Idaho to claim against the Idaho corporation income tax. The Idaho R&D Tax Credit is based on the federal section 41 credit for increasing research activities with a few notable exceptions.

Overview of the Idaho R&D Tax Credit:

  • The definitions of basic research payments, basic research, qualified research expenses, and qualified research are the same as the section 41 credit for increasing research activities except that only the amounts related to research conducted in Idaho qualify for the Idaho research credit.

  • The credit is the sum of:

    • 5% of the excess of qualified research expenses for research conducted in Idaho over the base amount; and

    • 5% of the basic research payments allowable under IRC § 41(e)for basic research conducted in Idaho

  • Base amount is the amount calculated under IRC § 41(c) and IRC § 41(h) except that:

    • a taxpayer’s gross receipts include only those receipts attributable to sources within Idaho as provided in Idaho Code §63-3027(q)and Idaho Code §63-3027(r); and

    • a taxpayer may elect to be treated as a start-up company under IRC § 41(c)(3)(B), regardless of whether the taxpayer meets the requirements of IRC § 41(c)(3)(B)(i)(I)or IRC § 41(c)(3)(B)(i)(II).

    • A taxpayer CANNOT revoke an election to be treated as a start-up company

    • A corporation included as a member of a unitary group of corporations may elect to share the Idaho research credit it earns (but does not use) with other members of the unitary group.

    • However, a corporation who is a member of a unitary group must claim the Idaho research credit to the extent allowable against its state income tax before it can share the credit with other members.​

    • The ID credit does not include the calculation of the federal alternative simplified credit (ASC) as an alternative calculation method to claim the credit.

Eligible Entities: C-Corporation, S-Corporations, LLCs, Partnerships

Deadline for Tax Filing: Due with Idaho Tax Return

General Data Required to Compute Credit

  • Claim Period Idaho Qualified R&D Expenses (QREs)

  • Gross Receipts for Prior 4 Years

Credit Carryforward

  • The credit can be claimed for the tax year during which the taxpayer qualifies for the credit. If the credit exceeds the limitation, the excess amount may be carried forward for up to 14 tax years.

  • The amount of the credit, along with the amount of any credits carried forward, cannot exceed the amount of tax due after allowance for all other income tax credits permitted. If credits earned in more than one tax year are available, the oldest credits must be applied first.

How to obtain the credit?

To use this credit, fill out Idaho Form 67. Taxpayers must also keep and make available, on request, records and verification that:

  • the research was conducted in Idaho

  • wages included in the computation were for qualified service performed by an employee in Idaho

  • supplies included in the computation were used for research conducted in Idaho

  • contract research expenses were for research conducted in Idaho

  • the research activities meet the definition of qualified research; and

  • the amounts included in the Idaho computation are includable in the computation of the federal credit allowed by IRC § 41

Refundable/Transferable Tax Credit: No

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