California’s state Research and Development Tax Credit opportunity matches the Federal Credit dollar-for-dollar to the extent that the company has in-state expenses. Additionally, the credit can be used to offset current-year tax liabilities and can be “carried forward” to offset tax liabilities in future years. Tax Point Advisors can help you determine whether or not you or your client qualify for these credits.

These credits can be accessed for qualified research activities that include the development of a new or improved business component that creates a product, process, technique, formula, invention or final design to improve performance, functionality, reliability, or cost. To qualify, these activities must be technical in nature, seek to eliminate technical uncertainty, and follow a process of experimentation. Qualifying expenditures include wages (both in-house and contract) and supplies. Exclusions apply to funded research activity or expenditures, or activity or expenditures that take place outside of California.

Many industries have activity qualifying for this credit in California, including software and high-tech, manufacturing, engineering and architecture, agriculture and wine production, and chemical and biotechnology, among others. Many “green” technologies and products also qualify, across all industries.

When combined with the Federal Research and Development Tax Credit, these state credits can provide significant benefit to California companies. Tax Point Advisors is the R&D expert to call to identify and capture your maximum credit. We are an independent specialty tax consulting firm, comprised of a trusted team of former Big4 accountants, engineers, and business advisors. Every Research and Development Credit Study begins with a free credit estimate and feasibility assessment.