The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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Minnesota offers a Research and Development Tax Credit that provides meaningful savings to companies conducting qualified research within the state. This credit is modeled closely on the federal R&D credit under IRC §41 and can be claimed in addition to it.
The Minnesota credit is calculated as:
Qualified expenses include wages paid to Minnesota-based R&D employees, supplies used in research, and 65% of contract research performed within the state. Unlike some states, Minnesota extends the credit to individuals, partnerships, and S corporations, in addition to C corporations.
To claim the credit, taxpayers file Schedule RD, Research Credit, with their Minnesota corporate or individual income tax return. Unused credits may be carried forward for up to 15 years, but they are nonrefundable.
📄 Minnesota Department of Revenue – Research Credit Overview
📄 Schedule RD Instructions (PDF)
It’s important to note that Minnesota’s tiered structure means that mid-size and large companies can see especially significant benefits on spending above $2 million. Our team helps ensure your QREs are properly documented and aligned with both state and federal requirements to maximize your claim.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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