Minnesota “Jobs Bill” Enhances R&D Tax Credits
With the intent to create jobs in Minnesota through tax incentives, Governor Tim Pawlenty signed
HF 2695 into law on April 1, 2010. One piece of the legislation significantly changes the research and development (R&D) tax credit, which will benefit eligible manufacturers across the state.
Key opportunities and breaks for Minnesota businesses
Through the new law, the state’s R&D tax credit includes the following enhancements:
- It’s no longer limited to C corporations, opening it up to qualifying S corporations and partnerships.
- The credit is increased from 5 percent to 10 percent of the first $2 million in qualified research expenditures over the base amount and 2.5 percent of all such expenses over $2 million.
- It’s refundable for taxable years beginning after December 31, 2009, which means the credit is no longer tied to tax liability.
- Companies experiencing losses can receive a refund for their credit instead of accruing a carry forward as required in the past.
This legislation permits pass-through entities to benefit from R&D investments just like C corps have been able to.
How we can help
“Now is the time to think about utilizing this opportunity. To maximize the credit, manufacturers need to understand what qualifies and put the proper documentation in place,” explains Lyle Henning, a manufacturing and distribution manager with LarsonAllen at lhenning@larsonallen.com and 612-376-4568. View all manufacturing and distribution principals.