Utah R&D Tax Credit Summary

 

Utah offers a tax credit for research activities conducted in Utah, detailed within Utah Code Section 59-10-1012. The Utah R&D Tax Credit is a non-refundable tax credit available to taxpayers with qualifying research expenditures in Utah. The Utah R&D Tax Credit mirrors the federal Section 41 Credit for Increasing Research activities with a few exceptions.

UT R&D Credit Summary

Utah R&D tax credit is the sum of:

  • 5% of qualified research expenses in Utah for the current tax year that exceed a base amount;

  • 5% of payments made to a qualified organization for basic research (as provided in IRC §41(c)) in Utah for the current taxable year that exceed a base amount; and

  • 7.5% of qualified research expenses for the taxable year.​

    • Effective retroactive to taxable years beginning on or after January 1, 2012, a tax credit of 7.5% of qualified research expenses for the current taxable year (9.2% for taxable years beginning on or after January 1, 2010 and before January 1, 2012; 6.3% for 2009; and 5% for 2008)

There are two methods to calculate the base amount: Regular Credit (RC) and Alternative Simplified Credit (ASC) method.  The base amount is calculated as provided in IRC §41(c) and IRC §41(h), except that:

  • it does not include the alternative incremental credit provided for in IRC §41(c)(4);

  • the taxpayer’s gross receipts include only those amounts attributable to Utah sources under the allocation and apportionment provisions; and

  • for purpose of calculating the base amount, a taxpayer may make an irrevocable election to be treated as a start-up company regardless of whether the taxpayer meets the requirements of IRC §41(c)(3)(B)(i)(I) or IRC §41(c)(3)(B)(i)(II).

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

Deadline for Tax Filing: Due with Utah Tax Return

  • The credit amount should be entered on Utah Form TC-40A, Income Tax Supplemental Schedule, Part 4, using code 12.

Data Required to Compute Credit:

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

  • Claim Period Utah QREs

  • Utah QREs for Prior 3 Years

  • Utah Gross Receipts for Prior 4 Years

Credit Carryforward:

  • 5% of qualified research expenses in Utah for the current tax year that exceed a base amount

    • "5% of Payments" may be carried forward as a credit for the next 14 taxable years

  • 5% of payments made to a qualified organization for basic research in Utah for the current taxable year that exceed a base amount

    • "5% of Payments" may be carried forward as a credit for the next 14 taxable years

  • 7.5% of qualified research expenses for the taxable year.

    • Any unused credit under the 7.5% QRE amount may not be carried forward.

Refundable/Transferable Tax Credit: No

Important Links and Forms:

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