Incentives Watch: California Guidance Issued on Research and Development Credit


The California Franchise Tax Board recently issued guidance that clarifies when a taxpayer can claim the research and development credit based on California’s definition of gross receipts. 

The Legal Division Guidance explains California’s modification of the federal definition of gross receipts and how taxpayers with no California gross receipts may still claim the incremental credit. For more information about the guidance, check out this Weekly State Tax Reportarticle.

Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New Jersey, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia, and Wisconsin offer research and development credits, according to the Bloomberg BNA State Tax Portfolios.

Of all the states, Louisiana, Nebraska, and Indiana offer some of the most generous research and development credits. In fact, for established research and development facilities, Louisiana is the lowest tax cost state, according to the Tax Foundation’s Location Mattersstudy.

In other developments . . .

Virginia enacted legislation that expands the local enterprise zone program for technology zones to include defense contractors, according to a recent article by Bloomberg BNA State Tax Law Editor Denise Ryan.

By: Kathleen Caggiano

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