Posted by Robert Bryant, Esq., CPA on 06.07.23

Thanks to House Bill 2400, beginning January 1, 2023, Missouri taxpayers can take advantage of research and development tax credit. This new law essentially reinstates the previous 2004 state tax credit for qualifying activities conducted in the state.

Research or experimentation activities as defined in the law are developed of an experimental or pilot model, plant process, formula, invention or similar property as well as the improvement of existing property or process. It is worth noting that Missouri research activities does not include ordinary testing or inspection of materials or products for quality control, efficiency surveys, advertising promotions or research in connection with literary, historical or similar projects.

The key points of the new Missouri 2023 tax law include:

• Qualifying research expenses are those found within the state
  • as defined by federal law of IRC Section 41
    • in essence, Missouri adopts a definition consistent with the IRC
• the state credit is 15% of additional qualified research expenses
  • and 20% if the qualified research relates to a state college or university
• No taxpayer is eligible to receive the state credit on any qualified research expenses that exceeds
  • 200% of the taxpayer’s average qualified research expenses incurred
  • during the three preceding tax years
• The aggregate of all state credits are pooled and cannot exceed $10M for any year
  • $5M of the of the $10M is reserved for minority and women business entities.
• In the event that the total state credits exceed the $10M cap
  • Each eligible claimant shall be awarded the credit on a pro-rated basis
• No single taxpayer shall be awarded a credit in excess of $300,000 for any year
• Any unused state credit may be carried forward 12 years

If you have any questions about this new law, please contact Tax Point Advisors for a free consultation at (800) 260-4138, or feel free to enter your contact information below.