The Missouri qualified research expense tax credit was recently revived and will be available from January 1, 2023 through December 31, 2028. This is great news for innovative businesses with qualified research activities in Missouri, as this type of credit had not been available since 2004.
The credit is equal to 15 percent of “additional qualified research expenses," or 20 percent of these research expenses if conducted in conjunction with a public or private college or university located in Missouri. Additional qualified research expenses are defined as “the difference between qualified research expenses, as certified by the director of economic development, incurred in a tax year subtracted by the average of the taxpayer's qualified research expenses incurred in the three immediately preceding tax years.”
Qualified research expenses are the same as those allowed under the federal research credit and include eligible wages, supply costs, and third party contract research following IRC §41.
Limitations to the credit apply as follows:
- Credits shall not be issued for any qualified research expenses that exceed 200 percent of the taxpayer’s average qualified research expenses incurred during the three immediate preceding tax years.
- The credit is not refundable, but may be carried forward for up to twelve succeeding tax years, and may be transferred, sold, or assigned.
- A taxpayer cannot receive tax credits greater than $300,000 in a calendar year.
- Total research tax credits issued by the state cannot exceed $10 million in any year, and there is a provision that $5 million of such tax credits will be reserved for minority business enterprises, women’s business enterprises, and small businesses.
The law also authorizes a sales tax exemption for the purchase of “qualified research and development equipment and property” which is defined as new tangible personal property in Missouri acquired by the purchaser for the purpose of conducting qualifying research and development activities.
Please contact your RubinBrown advisor for additional information on how to take advantage of these recent changes.
Readers should not act upon information presented without individual professional consultation.
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