State R&D Tax Credits: Which States Offer One and How They Work

State R&D tax credits are separate from the federal research credit in IRC 41, and a company that does qualifying work in one of these states can often claim both for the same research. This guide covers the 21 states whose research credits draw the most searches, including California. Every rate, form and deadline below was checked on September 25, 2026 against that state's own tax agency or its legislature's code site, and each figure names the tax year it applies to. State rules change often, several of them in 2025 and 2026, so confirm the current year's form before you file.

How state R&D credits work alongside the federal credit

The federal credit and a state credit usually start from the same research and the same records, then split. Six patterns show up across the states in this guide:

• Only in-state research counts. Every state here limits its credit to research performed inside its borders. Michigan, Maryland, Minnesota and others borrow the federal definition of qualified research expenses and then exclude anything done elsewhere; Texas uses the Texas share of line 48 of federal Form 6765.
• Some states require the federal claim. Florida and Georgia allow their credit only if the federal credit is claimed and allowed for the same year, Texas requires the expenses to have been reported on Form 6765, and New Hampshire counts only wages also claimed for the federal credit. California and Michigan say a federal claim is not required.
• The base is local. Several states build the base amount from in-state gross receipts (California, Arizona, Georgia, Maryland, Minnesota and Utah) or from the company's own prior in-state spending (Michigan, Illinois, Ohio, Texas and Wisconsin), so the state and federal credits for the same year can differ widely.
• Some credits pay cash; most do not. Most state credits only reduce state tax and carry forward. The exceptions are refunds (in full for Michigan and New York's program credits; in part, or for some taxpayers, in Maryland, Minnesota, Wisconsin, Arizona and Texas), an exchange with the state (Connecticut) and a sale to another taxpayer (Pennsylvania).
• Deadlines come before the return. Colorado, Florida, Maryland, Michigan, New Hampshire, New York and Pennsylvania require a pre-certification, application, certificate or tentative claim, and several of those programs have annual caps that are prorated when oversubscribed.
• The federal payroll election does not carry over. California's code says section 41(h), the election that moves up to $500,000 of the federal credit to payroll tax, does not apply for California purposes, while New Jersey still counts, for its own credit, the expenses a small business moved to the federal payroll credit. Georgia's withholding offset and Michigan's credit against withholding tax for flow-through employers are separate state rules.

Section 174 treatment splits too. California and Wisconsin never adopted the 2022 federal rule that required research costs to be amortized, and Wisconsin computes its credit under the Internal Revenue Code as amended to December 31, 2022. New Jersey tells companies that amend federal returns under Rev. Proc. 2025-28 to amend their state corporation business tax returns as well. The federal side of all this is in what the R&D tax credit is and how it works.

State R&D tax credits at a glance

Summary only. Each state's block below has the conditions, and the sources list at the end links the state page or statute behind every row.

Application and certification dates to put on the calendar

In these states the credit can be lost before the return is even prepared. As of September 25, 2026, the Maryland and Pennsylvania windows for 2025 spending are open, and the Texas refund application for 2026 reports is due November 15.

State-by-state rules

Michigan comes first because it draws the most searches; the rest follow alphabetically, and California, which has its own guide, is last.

Michigan R&D tax credit (new for 2025)

Michigan's credit applies to tax years beginning on or after January 1, 2025, and it is refundable. An employer with fewer than 250 employees gets 3% of its Michigan qualified research expenses up to its base amount (the average of the three prior calendar years) plus 15% of the expenses above it, capped at $250,000. An employer with 250 or more employees gets 3% plus 10%, capped at $2 million. Research done under a written agreement with a Michigan research university adds 5%, capped at $200,000, and a business with no prior Michigan research spending has a base of zero (Form 6133 instructions).

Nothing is allowed without a tentative claim on Form 6133 through Michigan Treasury Online. For 2025 expenses it was due April 1, 2026; for 2026 and later expenses it is due between January 1 and March 15 of the following year (RAB 2026-4). Statewide claims are capped at $100 million a year, and for 2025 expenses Treasury prorated them to 50.96% of each large-employer claim and 59.88% of each small-employer claim (April 24, 2026 notice). Corporations claim on the annual corporate income tax return; flow-through entities that withhold claim on the Form 5081 withholding return. The federal credit is not required.

Arizona R&D credit

Arizona's credit is 24% of the first $2.5 million of Arizona qualified research expenses above the base amount (plus basic research payments), and $600,000 plus 15% of anything above $2.5 million, for tax years beginning before December 31, 2030; after that the rates step down to 20% and 11% (A.R.S. 43-1168). The 2025 Form 308 (Form 308-I for individuals) allows the regular method or the alternative simplified credit, but a company with no qualified research expenses in any of the three prior years cannot use the ASC. A company with fewer than 150 full-time employees can receive 75% of the current year's excess credit as a refund, capped at the amount on its Certificate of Qualification from the Arizona Commerce Authority, and must elect it on the original return; the rest of that year's excess is waived rather than carried forward (2025 Form 308 instructions). Otherwise, unused credit from tax years beginning after 2021 carries forward 10 years.

Colorado R&D tax credit (enterprise zones)

Colorado's research credit exists only inside enterprise zones. It equals 3% of the increase in research and experimental spending in a zone over the average of the two prior years in the same zone, and it is taken in four equal parts: 25% in the year of the spending and 25% in each of the next three years. Qualifying spending follows section 174 rather than section 41. The business must pre-certify with the zone administrator before the activity each tax year (no credit is allowed for work done before pre-certification), obtain final certification before filing, and claim the credit with Form DR 1366. Unused credit carries forward until it is used (Enterprise Zone Tax Guide, Part 5).

Connecticut R&D tax credit

Connecticut has two corporation business tax credits, both for research done in the state and both measured on section 174 costs. On the 2025 forms, Form CT-1120RC gives 20% of the increase in research and experimental spending over the prior income year, and Form CT-1120 RDC gives 6% of net R&D expenses for a qualified small business (prior-year gross income of $100 million or less) or a graduated 1% to 6% for larger companies, with a Part II formula that limits the amount usable each year. Both carry forward 15 income years (RDC credits earned in years beginning on or after January 1, 2021). A company with gross income of $70 million or less that cannot use the credit can exchange the current year's credits with the state for a refund of 65% of their value (90% for a biotechnology company), up to $1.5 million, by mailing Form CT-1120 XCH when it files the return.

Florida R&D tax credit

Florida's credit is 10% of Florida qualified research expenses above the average of the prior four years, against the corporate income tax only, and it shrinks by 25% for each of those four years the business did not exist (s. 220.196, Florida Statutes). It is limited to target industry businesses in listed fields (manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science and nanotechnology) that claim and are allowed the federal credit for the same year and include a Department of Commerce letter with the application. Applications are filed on or after March 20 and before March 27 for the prior calendar year's expenses. The credit can offset up to 50% of remaining corporate tax and carries forward 5 years. The statewide cap is $9 million, and it is tight: for 2025 expenses, 168 applications asked for $162,788,299, so each approved applicant received about 5.5% of its computed credit (2026 allocation report).

Georgia R&D tax credit

Georgia's credit is 10% of Georgia research spending above a base amount: current Georgia gross receipts times the lower of the company's three-year average research-to-receipts ratio or 0.300. The company must claim and be allowed the federal credit for the same year and attach federal Form 6765 to Form IT-RD (the 2025 version covers tax years beginning on or after January 1, 2025). The credit is open to businesses in manufacturing, warehousing and distribution, processing, telecommunications, tourism, broadcasting, or research and development, and it can offset up to 50% of Georgia net income tax after other credits. Credits generated in tax years beginning on or after January 1, 2025 carry forward 5 years, down from 10, and excess credit can be applied against Georgia payroll withholding after a Form IT-WH notice of intent is filed through the Georgia Tax Center (Georgia DOR).

Illinois R&D credit

Illinois gives 6.5% of Illinois qualifying expenses (section 41 expenses for research in Illinois, including certain basic research payments) above the average of the three prior tax years. It is claimed with credit code 5340 on Schedule 1299-D for corporations, 1299-A for partnerships and S corporations, or 1299-C for individuals; it is not transferable, and unused credit carries forward 5 years. The Department of Revenue's 2025 Schedule 1299-I describes the credit for tax years ending before January 1, 2027, while its list of credit expiration dates shows it extended to tax years ending on or before December 31, 2031. Both cover 2025 and 2026.

Maryland R&D tax credit

Maryland's credit is 10% of Maryland qualified research expenses above a Maryland base amount built from the prior four years of Maryland research spending and gross receipts (Tax-General 10-721). The business applies to the Maryland Department of Commerce by November 15 of the year after the spending; for tax year 2025, Commerce lists its application portal as open June 1 through November 16, 2026 (Commerce). Commerce certifies approved amounts by February 15. Credits are capped at $12 million a year, with $3.5 million reserved for small businesses (net book value assets under $5 million), no applicant can receive more than $250,000, and oversubscribed pools are prorated. The certified credit is claimed on an amended return for the year of the spending or on a return for any of the next 7 years, with the certification attached. Unused credit carries forward through the 7th year, and a small business can take the excess as a refund.

Massachusetts R&D tax credit

Massachusetts gives business corporations 10% of Massachusetts qualified research expenses above a base amount plus 15% of basic research payments, or, by election, an alternative simplified credit of 10% of expenses above half the prior three-year average (5% if one of those years had none). The credit can offset 100% of the first $25,000 of corporate excise and 75% of excise above that, cannot reduce excise below the minimum, and carries over 15 years. It becomes 90% refundable only to the extent authorized under the state's life sciences or climatetech tax incentive programs (M.G.L. c. 63, s. 38M). The 2025 form is Schedule RC.

Minnesota R&D tax credit

Minnesota's credit is 10% of the first $2 million of Minnesota qualified research expenses above the base amount and 4% of the excess above $2 million, with Minnesota sales used in the base. Corporations, partners and S corporation shareholders can claim it (Minn. Stat. 290.068). For expenses in tax years beginning after 2024 it is partly refundable: an irrevocable election on a return filed by its due date (extensions included) refunds 19.2% of the credit left after tax reaches zero for tax years beginning in 2025, and 25% for tax years beginning in 2026 and 2027. The rest carries over 15 years. It is claimed on Schedule RD with federal Form 6765 attached.

New Hampshire R&D credit

New Hampshire's credit runs against the business profits tax and covers only wages for qualified manufacturing research done in the state that are also claimed for the federal credit. It equals the lesser of 10% of those wages above the base amount, a proportional share of the annual pool, or $50,000 ($100,000 under the version of the statute effective January 1, 2027). The pool is $7 million a fiscal year ($10 million under the version effective January 1, 2028). Applications are due June 30 after the tax year, awards are set by September 30, and each credit must be used within the next 5 tax years (RSA 77-A:5, XIII).

New Jersey R&D tax credit

New Jersey's credit applies only against the Corporation Business Tax: 10% of New Jersey qualified research expenses above the base plus 10% of basic research payments, figured with the same method the company used for the federal credit. There is no credit under the Gross Income Tax or the pass-through business alternative income tax. It is not refundable, cannot reduce tax below the statutory minimum, and carries forward 7 years (15 for companies in listed fields such as advanced computing, biotechnology and medical devices). Expenses a qualified small business moved to the federal payroll election still count. It is claimed on Form 306 (TB-114(R), November 25, 2025).

New York R&D tax credit

New York's research credits run through Empire State Development programs, and both are refundable. The life sciences research and development tax credit gives a new business certified as a qualified life sciences company 15% of its New York research and development spending (20% with fewer than 10 employees), up to $500,000 a year for up to three consecutive years, claimed on Form CT-648 (IT-648 for other filers) in the year shown on the certificate. Approved participants in the Excelsior Jobs Program can also receive an excelsior research and development component of that program's credit, claimed on Form CT-607 or IT-607 in the amount on the certificate.

North Carolina R&D credit

North Carolina has no research credit for current years. Article 3F of the General Statutes, the research and development credit, is repealed for tax years beginning on or after January 1, 2016 (G.S. 105-129.51). A 2025 bill, S.B. 354, proposed bringing it back, but the codified statute still shows the repeal.

Ohio R&D tax credit

Ohio's credit runs against the commercial activity tax (CAT), not an income tax: a nonrefundable 7% of Ohio qualified research expenses above the average of the three prior calendar years, carried forward up to 7 years, with records kept for four years after the later of the return's due date or filing date (R.C. 5751.51). For tax years 2025 and later, only businesses with more than $6 million a year of Ohio taxable gross receipts owe the CAT (Ohio Department of Taxation), so smaller companies usually have no tax for the credit to reduce.

Pennsylvania R&D tax credit

Pennsylvania's credit is 10% of Pennsylvania qualified research expenses above the Pennsylvania base amount, or 20% for a small business (net book value of assets under $5 million at the start or end of the year). The company applies to the Department of Revenue through myPATH between August 1 and December 1 for expenses in the tax year that ended in the prior calendar year, and must have at least two years of R&D spending (Department of Revenue). The department announces approved credits by May 1 of the second year after the expenses. Credits are capped at $60 million a fiscal year, $12 million of it for small businesses, and prorated when oversubscribed. There is no refund or carryback, but unused credit carries forward 15 years and can be sold or assigned with approval from the Department of Community and Economic Development; a buyer can use it against no more than 75% of a tax liability (Tax Reform Code, Article XVII-B).

Texas R&D tax credit (new rules from 2026)

Texas replaced its research incentives on January 1, 2026 (S.B. 2206). The sales tax exemption for research property is repealed, and a new franchise tax credit under Subchapter T applies to reports originally due on or after that date. The credit is 8.722% of Texas qualified research expenses above half the average of the three prior periods (10.903% if the company contracts with a public or private institution of higher education), or 4.361% of current expenses (5.451% with such a contract) if any of the three prior periods had none. The expenses are the Texas share of line 48 of federal Form 6765, so that form must have been filed with the IRS. The credit is limited to 50% of tax due, carries forward 20 consecutive reports, and is claimed on Form 05-182 with the long-form report. An entity that owes no franchise tax can take it as a refund by filing Form 05-183 on or before November 15 of the report year (Comptroller). A company that used the old sales tax exemption during a report period cannot claim the new credit for that period, and old Subchapter M carryforwards continue until they would have expired.

Utah R&D tax credit

Utah offers three nonrefundable credits for research done in Utah: 5% of Utah qualified research expenses above the base amount, 5% of basic research payments above their base, and 7.5% of the year's Utah qualified research expenses, with Utah-sourced gross receipts used in the base (Utah Code 59-7-612). The first two carry forward 14 years; the 7.5% credit does not carry forward. Corporations claim them with credit code 12 on the TC-20; there is no separate form, but the 2025 instructions say to keep all related documents (2025 TC-20 instructions).

Virginia R&D credit

Virginia's research credits have ended. Virginia Tax lists the refundable Research and Development Expenses Tax Credit and the Major Research and Development Expenses Tax Credit as expired January 1, 2025, so they covered only tax years beginning before that date (Virginia Tax). Applications for those years were due September 1 of the year after the expenses.

Wisconsin R&D tax credit

Wisconsin's credit is 5.75% of Wisconsin qualified research expenses above half of the prior three-year average (11.5% for research on internal combustion engines or certain energy efficient products), or 2.875% of current expenses if one of the three prior years had none. Up to 25% of the credit is refundable for tax years beginning after 2023, and the rest carries forward 15 years. Partnerships and S corporations compute it on Schedule R, but their owners claim it, and the credit counts as Wisconsin income. Wisconsin applies the Internal Revenue Code as amended to December 31, 2022, with the pre-2022 section 174 rules (2025 Schedule R instructions).

California R&D tax credit

California's credit (15% over the base or a 3% simplified credit from 2025, on Form FTB 3523, not refundable and carried over until used) has its own guide: California R&D tax credit.

One set of records for the federal and state claims

Because most of these states borrow the federal definitions and then carve out in-state work, the cleanest file tracks every research expense by location from the start: where each person did the work, where supplies were used, and where contract research was performed. That lets the same study support the federal claim on Form 6765 and each state's own base and credit. The R&D tax credit documentation checklist lists the records by category, and the R&D tax credit calculator estimates the federal simplified credit.

BEG's tax reviews, run by licensed tax professionals at BEG's tax partner, cover the federal credit first and also screen for state credits that fit your facts; that work is on the Tax Planning page. For a qualified small business, Payroll Credits handles the federal payroll election.

Sources: Michigan Treasury, Revenue Administrative Bulletin 2026-4; Michigan Treasury, Instructions for Form 6133 (TY2025); Michigan Treasury, R&D credit proration notice for 2025 expenses (April 24, 2026); Arizona Revised Statutes 43-1168; Arizona Department of Revenue, 2025 Form 308 instructions; Colorado Department of Revenue, Enterprise Zone Tax Guide; Connecticut DRS, Form CT-1120 RDC (Rev. 12/25); Connecticut DRS, Form CT-1120RC (Rev. 12/25); Connecticut DRS, Form CT-1120 XCH (Rev. 12/25); Florida Statutes, section 220.196 (2026); Florida Department of Revenue, R&D tax credit allocation reports; Georgia Department of Revenue, Research tax credit; Georgia Department of Revenue, Form IT-RD (2025); Illinois Department of Revenue, 2025 Schedule 1299-I; Illinois Department of Revenue, Income tax credits and expirations; Maryland Code, Tax-General 10-721; Maryland Department of Commerce, R&D tax credit; Massachusetts General Laws, chapter 63, section 38M; Minnesota Statutes, section 290.068; Minnesota Department of Revenue, 2025 Schedule RD; New Hampshire RSA 77-A:5; New Jersey Division of Taxation, TB-114(R) (November 25, 2025); New York Department of Taxation and Finance, Life sciences R&D tax credit; New York Department of Taxation and Finance, Excelsior jobs program tax credit; North Carolina General Statutes, Chapter 105, Article 3F; Ohio Revised Code 5751.51; Ohio Department of Taxation, Changes to Ohio’s commercial activity tax; Pennsylvania Tax Reform Code of 1971, Article XVII-B; Pennsylvania Department of Revenue, R&D tax credit program; Texas Legislature, S.B. 2206 (89th Legislature, enrolled); Texas Comptroller, Subchapter T franchise tax credit for R&D activities; Utah Code 59-7-612; Utah State Tax Commission, 2025 TC-20 instructions; Virginia Tax, Expired or repealed credits; Wisconsin Department of Revenue, Instructions for 2025 Schedule R; California FTB, 2025 Instructions for Form FTB 3523; California Revenue and Taxation Code 23609; 26 U.S.C. 41. Rates, forms and dates checked against these state and federal sources on September 25, 2026. This is general information, not tax advice for your situation. Tax services are provided by licensed tax professionals under a separate engagement agreement. BEG does not provide tax advice.