Understanding Section 41: The Research and Development (R&D) Tax Credit
The U.S. government offers the Research and Development (R&D) Tax Credit under Section 41 of the Internal Revenue Code (IRC)
March 7, 2023
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 major difference 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 differences for the Golden State:
The credit is equal to the sum of the following:
And finally, in order to claim the credit, California requires you to fill out a special form, FTB 3523.
Rebate knows the ins and outs of tax credits and we understand the modifications to the California Tax Credit and most importantly, how it relates to your business. We combine technology with our expert network of accountants who specialize in tax credits.