Nebraska R&D Tax Credit Summary

 

Nebraska offers the Research and Development Tax Credit to taxpayers for tax years beginning on or after January 1, 2006. The credit is available for businesses that incur R&D expenditures in Nebraska. Nebraska statute leverages off of the federal Section 174 definition of R&D activities.

R&D Credit Summary:

In Nebraska, business firms that are involved in research and experimental activities are allowed a credit of 15% of the federal credit allowed under IRC §41.​

  • For companies doing business both within Nebraska and outside, the amount of the credit can be determined by either

    • taking the ratio of qualifying expenditures within the state to total expenditures and multiplying it by the federal credit amount; OR

    • by apportioning the amount of the credit on the federal income tax return to the state based on the  the property factor as determined in section 77-2734.12 and the payroll factor as determined in section 77-2734.13.

The credit is increased to 35% of the federal credit allowed under  for business firms making expenditures in research and experimental activities on the campus of a college or university in Nebraska or at a facility owned by a college or university in Nebraska. 

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

  • For pass through entities, credit amounts can be used to offset an individual shareholder's tax liability.

Deadline for Tax Filing: Due with Nebraska Tax Return

  • The income tax credit is claimed on Form 3800N.

    • A claim for the credit may be filed quarterly for refund of the state sales and use taxes paid, either directly or indirectly, after the filing of the income tax return for the tax year in which the credit was first allowed.

  • Beginning after October 1, 2009, Companies claiming the credit must electronically verify the work eligibility status of all newly-hired employees in Nebraska during the tax year in which the credit is claimed.

Data Required to Compute Credit: Claim Period Nebraska Qualified R&D Expenses (QREs)

Credit Carryforward: 20 Years

  • The credit is allowed for the first tax year it is claimed and for the 20 tax years immediately following.

    • Nebraska Revised Statute 77-5806: The Nebraska Advantage Research and Development Act shall be operative for all tax years beginning or deemed to begin on or after January 1, 2006, under the Internal Revenue Code of 1986, as amended. No business firm shall be allowed to first claim the credit for any tax year beginning or deemed to begin after December 31, 2022, under the Internal Revenue Code of 1986, as amended.

Refundable/Transferable Tax Credit: Yes

  • The tax credit may be used to obtain a refund of sales and use taxes paid, or as a refundable corporate or personal income tax credit

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