State R&D Tax Credits

Pennsylvania

Credit Name: Research and Development Tax Credit

Expiration Date: None

Does it apply to C corps and pass-through entities?: No restrictions to entity type – may be applied to Corporate Net Income Tax, Personal Income Tax, and Capital Tax/Foreign Franchise Tax

Credit Carry forward: May be carried forward up to 15 succeeding taxable years

Description: One calculation method following the traditional federal calculation method except expenses and base amount are for amounts in Pennsylvania only. Large companies are entitled to a 10% tax credit and small companies (less than $5 million in total assets at the beginning or end of the tax year) are entitled to a 20% credit. The total amount allocated for the program is $60 million, with $12M allocated to small business.

Other Notes:

• Must apply for the credit online by December 15 of the year following the tax year, with notification of credit amount received by May 1 of the following year. Credit then offsets tax for the next tax year.
• Credit amounts are prorated against the rest of the claims to allocate the total $60 million amount.
• Credits may be sold or assigned. In order to sell an unused credit the taxpayer must file an application with DCED.