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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The Texas Research and Development Franchise Tax Credit offers businesses two options for tax relief:
The credit calculation is based on Qualified Research Expenses (QREs)—which follow the same general rules as the federal credit under IRC §41. So if your company qualifies federally, there's a strong chance you qualify at the state level too.
To claim the Texas credit, you must file Form AP-234, the Texas Franchise Tax Research and Development Activities Credits Schedule, along with your franchise tax report. The credit is limited to 50% of your franchise tax liability for the year, but unused portions can be carried forward for up to 20 years—creating long-term value.
It’s important to note that Texas businesses must choose between the franchise tax credit and the sales tax exemption—you can’t take both. Companies that invest heavily in equipment or software may benefit more from the exemption, while others see greater return from reducing their franchise tax. Strategic planning is key to maximizing your benefit, and our team can help you model both options to make the most informed decision.
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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