« Home | Day 31 - Tax Expenditure Report? » | Day 30: Truth in Bonding » | Day 29 - Gas tax increase? » | Day 26 - HB203: focusing on real economic developm... » | Day 25 - Bad news on soccer stadium » | Day 24 - Senate individual income tax proposal » | Day 23 - Half way there » | Day 22 - Finally! » | Day 18 - Expanding the sales tax exemption for bus... » | Day 17 - Shifting general funds from higher educat... »

Day 32 - R&D Tax Credit

Utah will become a more attractive state for research and development if SB171 passes. Sponsored by Sen. Stephenson, SB171 improves Utah's R&D tax credit as follows:

- A new tax credit without carry forward equal to 5% of all qualified research expenses (QRE) as defined by the IRS

- An increased credit equal to 8% of incremental QRE above a base year, up from the existing 6%.


The R&D tax credit calculation is far too complicated to fully explain here, but Utah's current credit is tied to the federal R&D credit which is based on incremental R&D expenditures over a base year. Sales volume is also a component of the formula. Unfortunately, the federal credit calculation penalizes companies with rapidly growing sales. SB171 corrects this problem by adding the additional 5% credit based on total QRE, independent of incremental R&D expenditures and sales volume.

Research and development activity creates high-wage jobs, improves productivity, and is export-oriented, all of which are critical elements in Utah's economic development.

Disclaimer: Like all legislation, SB171 may eventually be modified, meaning that the above points may no longer be 100% relevant.