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R & D Tax Incentives 

Purpose

Tax credits are intended to provide incentives for university-based research, in-house research of several kinds, and research and development in start-up, technology-based enterprises. It is important for the applicant to understand the different incentives and to select the most appropriate for the eligible research and development activity.

Research and development with universities-Act 182 of 2003 15-4-2708(a)

An eligible business that contracts with one or more Arkansas colleges or universities in performing research may qualify for a 33% income tax credit for qualified research expenditures. 

The income tax credit earned for in-house research and development may be used to offset 100% of the businesses' state income tax liability.  Any unused credit may be carried forward for a period of nine (9) years.

In-House Research and Development – Act 182 of 2003 15-4-2708(b)

New and existing eligible businesses that conduct "in-house" research that qualifies for federal research and development tax credits may qualify for in-house research income tax credits.  The credit allowed is twenty percent (20%) of qualified research expenditures that exceed the base year, for a period of three (3) years and the incremental increase in qualified research and expenditures for the succeeding two (2) years.

The income tax credit earned for in-house research and development may be used to offset 100% of the businesses' state income tax liability.  Any unused credit may be carried forward for a period of nine (9) years.

In-House R&D by a Targeted Business - Act 182 of 2003 15-4-2708(c)

Businesses deemed by the commission to fit within the six business sectors classified as "targeted businesses" may qualify for income tax credits based on qualified research and development expenditures. An eligible business may be approved for an income tax credit each year equal to thirty-three percent (33%) of the qualified research and development expenditures incurred each year for the first five years of the financial incentive agreement.

The income tax credit earned for in-house research and development may be used to offset 100% of the businesses' state income tax liability.  Any unused credit may be carried forward for a period of nine (9) years.

R&D in Area of Strategic Value – Act 182 of 2003 15-4-2708(d)(1)(A)

The Strategic Value Research and Development incentives are for qualifying businesses that invest in:  1) in-house research in an area of strategic value; or 2) a research and development project offered by the Arkansas Science & Technology Authority. The income tax credit is equal to thirty-three percent (33%) of qualified research expenditures. 

The maximum tax credit that may be claimed by a taxpayer under this program is $50,000 per tax year. Any unused credit may be carried forward for nine (9) years beyond the tax year in which it was earned.

How to Participate

All applicants interested in this program are asked to contact the Arkansas Economic Development Commission to complete the application and initial approval. Following this, the company should be prepared for a site visit conducted by the Arkansas Science & Technology Authority. Once a financial incentive agreement is signed, the company will be required to submit the appropriate year end reports in order to be issued a tax credit certificate.

Contact

Arkansas Economic Development Commission
900 West Capitol, Suite 400
Little Rock, AR  72201
(501) 682-1121
1-800-ARKANSAS (800) 275-2672
INFO@arkansasedc.com

Dr. Steve Stanley, Vice President Commercialization
Arkansas Science & Technology Authority
900 West Capitol, Suite 320
Little Rock, AR 72201
Phone: (501) 683-4408
Fax: (501) 683-4420
steve.stanley@arkansas.gov