Rhode Island R&D Tax Credit Summary

 

The Rhode Island R&D Tax Credit allows a taxpayer who makes qualified research expenses (QREs) in Rhode Island to claim an income tax credit. There are two credits available in Rhode Island: (1) R&D Property Credit and the (2) Qualified Research Expense Credit.​

(1) Rhode Island State R&D Property Credit

R&D Property Credit Summary

  • The amount of the credit is 10% of the cost or other basis for federal income tax purposes of tangible personal property, and other tangible property, including buildings and structural components of buildings, acquired constructed, reconstructed, or erected after July 1, 1994

    • The credit is allowed in the year the property is first placed in service, which is the earlier of:

      • the year the taxpayer begins depreciation of the property; or

      • the year that the property is made ready and available for a specifically assigned function

  • The credit can not reduce the tax of a corporation to less than the $250 minimum tax

To qualify for the credit the property must:

  • be depreciable under IRC §167 or recovery property for which a deduction is allowable under IRC §168

    • have a useful life of three years or more

  • be acquired by purchase as defined in IRC §179(d)

  • be located in Rhode Island; and

  • be used principally for purposes of research and development in the experimental or laboratory sense [R.I. Gen. Laws §44-32-2(b)]

(2) Rhode Island State R&D Expense Tax Credit

R&D Expense Tax Credit Summary

  • The R&D tax credit equals the excess of the qualifying research expenses in the taxable year over the base period expenses:

    • 22.5% for expenditures up to $111,111; and

    • 16.9% for the remaining expenditures over the $111,111

  • QREs and base period expenses have the same meaning as defined in IRC Section 41, provided that such expenses were incurred after July 1, 1994.

    • Expenses must have been incurred in Rhode Island after July 1, 1994

  • The credit amount taken in any one taxable year may not exceed 50% of the company’s remaining tax liability after all other credits have been applied

  • The credit allowed shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated return

Eligible Entities:

  • R&D Property Credit 

    • C-Corporations only

  • R&D Expense Tax Credit

    • C-Corporations, individuals, partnerships and S-Corporations.

Deadline for Tax Filing: Due with Rhode Island Tax Return

Data Required to Compute R&D Expense Tax Credit:

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

  • Claim Period RI QREs

Credit Carryforward:

  • R&D Property Credit  

    • Any credit not used can be carried forward for up to seven years.

  • R&D Expense Tax Credit  

    • Any credit not used can be carried forward for up to seven years.

Refundable/Transferable Tax Credit: 

  • R&D Property Credit - No

  • R&D Expense Tax Credit - No

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