Oregon businesses can take advantage of Federal and state research and development (R&D) tax credit programs to save money.
Oregon is a beautiful state that houses the majestic Mt. Hood, the setting of the cult favorite show Portlandia, and resources for innovative entrepreneurs. Qualifying businesses can claim Oregon tax credits for R&D to fuel innovation.
Keep reading to learn how to get a state R&D tax credit and discover how your company could claim a Federal tax credit as well.
Does Oregon Offer a Tax Credit Program for R&D?
According to Business Oregon, the state R&D tax credit program offers about 15% in tax credits for qualified research expenses (QRE) or basic research payments that take place in Oregon.
The program is funded through 2029. The credit is also partially refundable for companies with 3,000 employees or fewer. Be aware that non-refundable amounts may be carried forward until 2029.
Inventive Oregon business owners can also claim a Federal R&D tax credit if they qualify.
The federal tax credit began in 1981 as a temporary program, but due its popularity, it was signed into permanent existence in 2015. This program is designed to help companies reduce tax burdens and fuel innovation.
Does Your Business Qualify for a Federal R&D Tax Credit?
Do you qualify for an R&D tax credit from the federal government? Take this easy quiz to find out:
- Did you develop a new product or process or improve upon an existing functionality?
- Did you deal with some form of uncertainty in the development process (appropriateness of design, method used, etc.)?
- Did you utilize a process of experimentation to eliminate uncertainty (modeling, prototyping, trial and error or other testing)?
- Did you conduct experimentation which relied on engineering, biological, physical or computer science?
- Do you employ all or a portion of your workers within the United States?
If you answered ‘yes’ to these questions, then you could be a great candidate for the Federal R&D tax credit. The next step in the process is to determine which of your business’ activities can count in your credit calculation.
What Activities are Eligible for R&D Tax Credits?
Since applicants can expect to receive 7-10% of their QRE, it’s imperative that you know what counts as such. Your business’ QRE’s include:
- The salaries of company workers dedicated to or helping with R&D
- The cost of disposable supplies used in R&D
- The fees of 3rd party U.S. based contractors
Now that you know what counts as a QRE, cou can use a free R&D tax credit calculator to get an estimate of your Federal credit.
When Can Business Owners Apply for the Federal R&D Tax Credit?
You can apply for a Federal tax credit at any point as the program has a three year look back. When you apply for the federal R&D tax credit, you’ll need to fill out Form 6765 as dictated by the IRS. You can submit it when you file your business taxes.
Now, applying for this credit isn’t as simple as filling out a sheet of paper. To avoid any IRS headaches, it’s in your best interest to work with professional who can help you put together a detailed R&D study.
Be prepared to answer questions about how your product was developed, how much you pay the individuals who participate in R&D, the names of other companies you may own, and more.
Oregon Tax Credits for Innovation: What You Need to Know
Qualifying companies can take advantage of Oregon tax credits for R&D. This resource, in addition to a Federal R&D tax credit, can reduce your company’s tax burden.
An Oregon R&D tax credit can be worth as much as 15% of your QRE and a Federal credit allows you to receive about 10% of your QRE in the from of a credit.
Contact the Bowers R&D Associates Research and Development tax credit team today to realize your company’s tax credit potential.