Utah’s R&D tax credits encourage companies to forge new ways to create and innovate. Is your company qualified for this lucrative tax incentive?
Every year, both the United States and the state of Utah give businesses billions of dollars as a reward for researching new products, investigating new services, and continuing to innovate across the state and country.
Companies in many industries can benefit from Research and Development tax credits. Taxpayers should not assume that only technology-based companies would qualify to receive this cash flow. Businesses from the agriculture, construction, textile and renewable energy industries could all qualify, depending on the activities they practice. Qualifying activities look different depending on each unique business, and should be thoroughly reported for possible audit by the IRS.
Through the federal R&D tax credit, established businesses can offset about 10-15 percent of the money they spend on a dollar for dollar basis. Moreover, businesses such as startups that have not yet become revenue-generating can use the R&D tax credit against their payroll taxes.
While Utah does not currently have a claimable Research and Development tax credit past the 2010 tax year, the state does advise that all businesses keep strict records of all related documents. According to the Utah state tax website, businesses that perform qualified research activities are entitled to the R&D tax credit, which is defined by the following:
- 5% of qualified research expenses for qualified research activities
- 5% of some payments made to a qualified research organization located in Utah, such as a university
- 7.5% of your qualified research expenses in Utah for the tax year
This record-keeping process can often be a complex and lengthy undertaking for many companies. However, even without a state Research and Development tax credit – the federal credit is still lucrative for Utah businesses.
At National Tax Group, our expert tax professionals can efficiently lead companies through the records process step by step. Furthermore, our team can determine if there are any additional credits your business can claim. Give us a call at (561) 257-3436 to schedule your free initial assessment.