The California R&D Tax Credit

Rebate provides R&D Tax solutions for states with different laws

California likes to do things a bit differently, so it’s fitting the state has its own unique version of the R&D Tax Credit. While the California R&D Tax Credit is based on the federal version, it comes with a few modifications. 

The first rule is that you must be conducting the qualifying research and basic research activities in California in order to claim the credit.  Basic research can mean any type of research that has a specific commercial objective. 

A few other different rules apply for the Golden State when it comes to the state-specific R&D Tax Credit:

  • The credit is equal to the sum of the following:
    • 15% of qualified expenses that exceed a base amount (compared to the 20% federal credit rate)
    • 24% of basic research payments
  • California does not limit the expense amount that can qualify for the tax credit
  • Unused California research credits can be indefinitely carried forward (compared to federal credits which can be carried back one year and forward 20 years)
  • There is no Alternative Simplified Credit option in California
  • California still allows for the Alternative Incremental Research Credit

And finally, in order to claim the credit, California requires you to fill out Form FTB 3523.

Rebate knows the ins and outs of tax credits and we understand the modifications to the R&D Tax Credit in California, and most importantly, how it relates to your business.  We combine technology with our expert network of accountants who specialize in tax credits. 

If you’re unsure of how to start your claim or if you qualify for federal or California credits, contact us for a free, easy evaluation or use our simple calculator tool to get a free evaluation in minutes.