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Delaware Enhances State R&D Tax Credit

Governor Jack Markell (D-DE) recently enacted SB 200, which significantly enhances Delaware’s R&D tax credit. In particular, the bill removes the $5 million annual cap on credits awarded and makes the credit refundable. 

Calculating the State Credit

Currently, the credit equals 10% of the excess of the taxpayer’s in state qualified research expenses (QREs) for the taxable year over the base amount, or 50% of Delaware’s apportioned share of the taxpayer’s federal R&D credit calculated under the alternative simplified credit (ASC) method. Delaware’s apportioned amount of the taxpayer’s federal credit calculated under the ASC method equals the federal ASC credit that the taxpayer may claim multiplied by a percentage equal to a ratio of the taxpayer’s in state QREs over the taxpayer’s total QREs. 

For businesses with average annual gross receipts for the prior four years of $20 million or less, the credit equals 20% of the excess of the taxpayer’s in state QREs for the taxable year over the base amount or 100% of Delaware’s apportioned share of the taxpayer’s federal R&D credit calculated under the ASC method.

Enactment 

The new law is effective for QREs allowed in accordance with section 41 of the Internal Revenue Code for tax periods after December 31, 2016. With the enactment of SB 200, Delaware will have one of the more generous R&D state tax credits in the country and has established itself as a state leader in incentivizing research and development in the United States. Click here to read the bill.

alliantNational, alliantgroup’s national practice, provides subject matter expertise on complex and emerging federal, state and international tax issues as well as legislative and regulatory affairs to help businesses receive timely and precise guidance on all their tax matters. Contact us today to learn how your business can benefit from alliantgroup’s tax consulting services.

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Contact our team today with any tax controversy concern you’re facing. We fight every day to protect the interests of the taxpayer, and we look forward to putting you in the best tax situation possible.

GET STARTED

Contact our team today with any tax controversy concern you’re facing. We fight every day to protect the interests of the taxpayer, and we look forward to putting you in the best tax situation possible.

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aNlogo-footer3@2x

Washington D.C.
Willard Office Building, Suite 300 1455 Pennsylvania Ave.
Washington, D.C. 20004
202.888.7006

© 2021 alliantNational. - All Rights Reserved.

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