Similar to the Federal R&D Tax Credit, Minnesota’s research credit allows corporations undertaking research and development in the state of Minnesota the ability to recoup much of their costs. Beginning in 2010, new state legislation doubles the size of the credit and opens the credit up to partnerships and S-Corporations. Now more small and mid-sized businesses can potentially take advantage of this valuable credit.

  • The tax credit for R&D expenditures is 10 %, up to the first $2 million in eligible expenses. The credit is 2.5% for eligible expenses above $2 million.
  • Minnesota’s R&D credits are refundable, which means if the tax credits exceed the tax liability, the state will issue a refund payment.
  • Businesses do not need income tax liability or revenue to claim the credit, as long as they have qualified research and development expenditures.
  • S-Corporations and partnerships must pass the credit through to its partners or shareholders.

What is considered qualified research?

The definition of qualified research mirrors federal qualifications. Specifically, if you attempt to develop or improve any of the following, you may be eligible for the R&D credit:

  • Products
  • Processes (e.g. – manufacturing processes)
  • Computer Sciences
  • Software
  • Formulae
  • Techniques
  • Inventions

Firms in the following industries / sub-industries conducting R&D in Minnesota can be eligible for the credit:

  • Manufacturing – Electronics, Tool & Die, Fabrication improvements
  • High – Tech and Software Development – Software systems and high-tech component design and development
  • Life Sciences – Biotechnology, pharmaceuticals, medical device manufacturing
  • Agriculture – farming and agriculture techniques
  • Chemicals – Chemical development and production

Why TRCG Advisors?

TRCG actively works with businesses across the state to provide local service and support. TRCG has expertise in sustaining the R&D Credit through an audit process as well as claiming new credits. Our consultants can help you in determining which activities qualify and ensuring accuracy and due diligence.