On May 21st, the Texas State Legislature unanimously passed H.B. 800, establishing a new incentive for research and development activities. It was signed into law by Governor Rick Perry on June 14th, and becomes effective on January 1, 2014.
Texas joins thirty-eight other states that provide for a credit for increasing research activities in some form or another. The bill re-establishes an R&D credit that lapsed in 2008. Texas has no income tax, but the credit can provide one of two alternative benefits: sales tax exemptions for property used in qualified research, or a credit against State Franchise Tax Liability. The credit amount is five-percent (5%) of the difference between current-year qualified research expenditures (“QREs”) over fifty percent (50%) of the average of the prior three years’ QREs. Eligible taxpayers can file for the benefit beginning in the next tax year. Taxpayers should contact alliantgroup, L.P to determine how they can benefit from State and Federal incentives.