Wisconsin R&D Tax Credit Summary

 

The state of Wisconsin R&D Tax Credit leverages off of the federal section 41 rules regarding the calculation and qualification of qualified research activities with some modifications as noted below. The definition of qualified research is the same as the federal definition with the exception that the expenditures must be incurred in Wisconsin. For taxable years beginning after December 31, 2014, a corporation may claim a research credit against the income/franchise tax, as allocated under Wis. Stat. §71.28(4)(d).  

 

For tax years beginning before January 1, 2013, the credit may only be claimed by corporations. For tax years beginning on or after January 1, 2013, the credit may be claimed by corporations as well as by an individual, a partner of a partnership, a shareholder of a tax-option corporation, or a member of a limited liability company.​

Research Credit For Increasing Research:

  • The credit for taxable years beginning in 2015 is equal to 5.75% of the amount by which the claimant's qualified research expenses for the taxable year exceed 50% of the average qualified research expenses for the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit.

    • If the claimant had no qualified research expenses in any of the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit, the claimant may claim an amount equal to 2.875% of the qualified research expenses for the taxable year for which the credit is claimed.

  • “Qualified research expenses” includes only expenses incurred by the claimant, incurred for research conducted in Wisconsin for the taxable year and does not include compensation used in computing the credit under Wis. Stat. §71.28(1dx) (development zones credit), the corporation’s base amount

Research Credit For Activities Related to Internal Combustion Engines:

  • The credit for taxable years beginning in 2015 is equal to 11.5% of the amount by which the claimant's qualified research expenses for the taxable year exceed 50% of the average qualified research expenses for the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit.

    • If the claimant had no qualified research expenses in any of the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit, the claimant may claim an amount equal to 5.75% of the qualified research expenses for the taxable year for which the credit is claimed.

  • The credit is for qualified research activities related to designing internal combustion engines for vehicles including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles.​

Research Credit For Activities Related to Certain Energy Efficient Products:

  • The credit for taxable years beginning in 2015 is equal to 11.5% of the amount by which the claimant's qualified research expenses for the taxable year exceed 50% of the average qualified research expenses for the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit.

    • If the claimant had no qualified research expenses in any of the 3 taxable years immediately preceding the taxable year for which the claimant claims the credit, the claimant may claim an amount equal to 5.75% of the qualified research expenses for the taxable year for which the credit is claimed.

  • The credit is for qualified research activities related to the design and manufacturing of energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid-electric vehicles, that reduce the demands for natural gas or electricity or improve the efficiency of its use.

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

Deadline for Tax Filing: Due with Wisconsin Tax Return

  • A taxpayer seeking the research expense credit, or the research credits applying to vehicles and energy efficient devices, must claim the credit no later than four years after the unextended due date of the return to which it relates.

Data Required to Compute Credit

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

  • Wisconsin QREs for Prior 3 Years

Credit Carryforward: 15 Years

  • The unused portion of the credit may be carried forward and credited against Wisconsin income or franchise taxes due for up to 15 years.

Refundable/Transferable Tax Credit: No

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