Research and Development Tax Credit

Overview

The Research and Development Tax Credit encourages existing businesses with operating facilities in Louisiana to establish or continue research and development activities within the state.

  • Provides up to a 40% tax credit on qualified research expenditures incurred in Louisiana — with no cap and no minimum requirement.

View new Research and Development Tax Credit Agreed Upon Procedures for CPAs.

Eligibility

  • The Tax Credit Incentive is open to companies who have incurred research and development expenditures in Louisiana and who meet certain requirements (where listed). Only research and development conducted in Louisiana will qualify for the Tax Credit Incentive.
  • In order for credits to be awarded, a taxpayer must claim the expenditures within one year after December 31 of the year in which the expenditure was incurred.Ineligible Businesses

    The following businesses will be ineligible to participate in the Research and Development tax credit program, unless specifically invited by the Secretary of LED to:

    1. Professional services firms that do not have a pending or issued United States patent related to the qualified research expenditures claimed; and
    2. Businesses primarily engaged in custom manufacturing and custom fabricating that do not have a pending or issued United States patent related to the qualified research expenditures claimed.

    Program Statutes & Rules:

    All incentive program rules are in the Louisiana Administrative Code maintained by the Office of the State Register.

How to Apply

A company must submit the completed Research and Development application and fee. Based on your application type additional information must be provided:

1. Increase in Louisiana Research and Development (50+ Employees)

  • Filed Federal Form 6765 for the current tax year and the three previous tax years
  • Please attach the Louisiana only qualified research expenses for the three previous years (if applicable)

2. Small Business Innovation Research Grant (SBIR/STTR)

  • SBIR/STTR grant
  • Listing of disbursements received
  • Bank statements indicating distribution of funds

3. Less than 50 Employees

  • Filed Federal Form 6765 for the current tax year or a completed Agreed Upon Procedures Report
  • Detailed narrative of the research and development conducted
  • Breakdown of cost by expenditure category (wages, supplies, contracted research, etc.)
  • Breakdown of cost by each activity (business component)
  • W-2’s or K-1’s for wages listed on the application
  • 1099’s, K-1’s and/or invoices for contracted research
  • W-2’s, K-1’s, 1099’s must redact and only leave the last four of social security numbers
  • Financial Statements for the tax year within which you’re applying (compiled or reviewed)
  • Tax returns for the tax year within which you’re applying
  • Organizational chart for the tax year within which you are applying, please include employee name, title and description of work performed by each employee

Update on Application Processing Time:

LED processes applications on a first in, first out basis. There are three categories of R&D applications: (1) companies with 50+ employees (“6765”); (2) companies receiving federal SBIR grants (“SBIR”); and (3) companies with less than 50 employees (“LQRE”). Currently, 6765 and SBIR applications are processed within 90 days, unless additional information is needed or the application is selected for detailed review (statutorily required for at least 10% of applications). The LQRE application process currently requires six to eight months due to the detailed review required and a dramatic increase in the volume of applications, many for companies whose activities are not eligible for R&D credits. For example, within recent years one consulting firm has submitted applications of which over 90% have been denied credits due to ineligibility. Most of the LQRE applications submitted by other firms have been eligible for the program. To minimize the time needed for processing, all applicants are advised to make sure all requested information is provided in a timely manner, and if they choose to retain a consultant, to choose carefully.

This program is administered by Louisiana Economic Development.

For information regarding the Research & Development Tax Credit, contact the program administrators:

Kimberly Rogers
225.342.5399
kim.rogers@la.gov