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RESEARCH EXPENSES TAX CREDIT

Eligible Businesses:
Any business that engages in research and development activities in Maine that meet the definitions in Section 41 of the Internal Revenue Code. Such expenses include certain in-house and contract research expenses if they relate to discovering information that is technological in nature and intended for use in developing a new or improved business component.  
 
 
Program Summary:
Income tax credit for companies that incur qualifying research expenses in Maine in excess of the base period amount; the base amount is the average research expenses incurred over the prior three years. The credit equals 5% of the qualified research expenses that exceed the average research expenses, plus 7.5% of basic research payments to educational institutions and certain qualified research organizations. The credit is limited to the first $25,000 of tax plus 75% of the tax over $25,000 per year; the credit can be carried forward 15 years.
   
Program Valuation Example:
 
 
Investment Assumptions
Research Payments to University
$2,500,000
Research Expenses
$4,000,000
Average Research Expenses (Prior 3 Years)
$3,000,000
Eligible Research Expenses
$1,000,000
ROI & Program Valuation
Income Tax Credit for Incurred Research Expenses ($1,000,000 * 5%)
$50,000
Income Tax Credit for Research Payments to University ($2,500,000 * 7.5%)
$187,500
Total Value of Research Expenses Tax Credit:
$237,500
 


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