Utah's R&D Tax Credit: A Time Machine for Future Profit

Welcome to Utah! 

Known for its surreal landscapes and thriving tech sector, the Beehive State offers a lucrative incentive to its industrious, local businesses investing in innovation: the Credit for Increasing Research Activities in Utah (i.e., the Utah R&D tax credit). This tax credit can significantly reduce companies’ tax liabilities – freeing up funds for reinvestment and growth – as far as 14 years in the future.

That’s right! Most Utah R&D tax-credit components carry forward. While Utah’s R&D tax credit remains nonrefundable, if the generated R&D credit exceeds a company’s tax liability, then the remainder can be carried forward (not backward) to offset future tax liability for up to 14 years. 

As their CPA, you play a critical role in helping your clients take advantage of this opportunity.

We’re here to walk you through everything you need to know to file for tax year 2024.

Key Features of Utah’s R&D Tax Credit

The Credit for Increasing Research Activities in Utah generally follows the federal Credit for Increasing Research Activities under 26 U.S. Code § 41, with a few exceptions:

• All qualified research expenditures (QREs) must be incurred in the state of Utah.
• The Utah R&D tax credit does not allow for the alternative incremental credit (AIC) method.
  • The Utah State Tax Commission ruled in 2011 that the alternative simplified credit (ASC) method was not excluded. 

As provided by Utah Code §59-10-1012, the Utah R&D tax credit sums:

• • 7.5% of QREs in Utah for the current taxable year;
  • 5% of QREs for increasing research activities in Utah exceeding a base amount; and
  • 5% of certain payments made to a qualified organization (e.g., a university) increasing basic research in Utah exceeding a base amount.
    • Basic research denotes any original investigation that advances scientific knowledge and need not have a specific commercial objective.

The taxpayer cannot carry forward the credit’s first component, while the latter two components may be carried forward for up to 14 years.

Deadlines and the Application Process

The Utah State Tax Commission administers the Utah R&D tax credit, which is claimed directly on Form TC-20: the Utah Corporation Franchise and Income Tax Return. 

April 15, 2025 is the deadline to file for calendar-year taxpayers. 

The 15th day of the fourth month after the fiscal year ends is the deadline to file for fiscal-year taxpayers. Of note, fiscal-year taxpayers in Utah must also practice fiscal-year tax filing at the federal level.

At the time of writing, neither the form nor the instructions are updated for tax year 2024, and no eFile (i.e., electronic filing) option is available.  

Acena Consulting will ensure accelerated, accurate, and on-time completion of your tax forms and documentation. Schedule a free consultation today for immediate assistance.

Encore in Michigan

Thanks for coming on tour as we explored R&D state tax credits in Arizona, California, Hawaii, and Utah!

Because legislation for a new R&D tax credit in Michigan currently sits on the desk of Governor Gretchen Whitmer, we will perform an encore in Michigan when the legislation is finalized. 

• Subscribe to our newsletter to receive the Michigan update directly to your inbox.
• Questions? Please email me at laura.whittenburg@acenaconsulting.com. 
• Sign up for our free, interactive webinar on December 17: “Cracking the (Tax) Code for R&D.”
  • This workshop provides one CPE credit for professionals keeping up with continuing education.

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Edited by Randy Eickhoff, CPA, Founder & Head Coach at Acena Consulting. Photo courtesy of snowpeak on Flickr.