Maine & Company - Solutions for Business

Technology Tax Credits

Research Expense Tax Credit
The Research Expense Tax Credit is based on a percentage of the federal credit for increasing research activities. The credit is limited to 5% of the excess qualified research expenses over the previous three-year average plus 7.5% of the basic research payments in IRC §41(e)(1)(A). The credit is further limited to 100% of the first $25,000 in tax liability plus 75% of the tax liability in excess of $25,000. The credit cannot be carried back, but can be carried forward for up to 15 years.  Eligible businesses include any business that engages in research and development activities in Maine that meet the definitions in Section 41 of the Internal Revenue Code.  Such expenses include certain in-house and contract research expenses if they relate to discovering information that is technological in nature and intended for use in developing a new or improved business component.

R&D Super Credit
The R&D Super Credit is based on qualified research payments exceeding 150% of the average for the three-year period prior to the effective date of the credit.  The credit is limited to 50% of the tax otherwise due after all other credits.  Further, the credit cannot reduce tax liability below the amount due the previous year after credits. The credit cannot be carried back, but can be carried forward for up to five years.  Eligible businesses include businesses that qualify for the research expense credit and whose qualified research expenses conducted in Maine for the taxable year exceed 150% of the average research expenses for the three taxable years prior to September 1997.

High-Technology Investment Tax Credit
The High-Technology Investment Tax Credit amount is equal to the adjusted basis of eligible equipment placed in service in Maine less any lease payments received during the taxable year; the credit cannot reduce the tax liability to less than the preceding tax year's liability after the allowance of any credits, and it cannot reduce the tax liability in the current year below zero; unused portions of the credit may be carried forward five years; the credit cannot exceed $100,000 in any one year; income must be increased by any credit base amount claimed as a business expense.  Eligible businesses include businesses primarily engaged in high-tech activities; high-tech activities include the design, creation, and production of computer software, computer equipment, supporting communications components and other accessories that are directly associated with computer software equipment; it also includes the provision of Internet or advanced telecommunications services.