Are R&D Tax Credits
Available in Maine?
Yes. The state of Maine provides the Research and Development (R&D) Tax Credit for qualified research conducted within the state. Maine’s R&D Tax Credit follows the federal Section 41 rules for credits related to increasing research activities. The state offers a research expense tax credit similar to the federal credit and a super R&D tax credit for certain additional activities.
Maine Research Credit
- Governed by statute 36 §5219-K.
- Qualified Research Expenses (QREs) must be incurred in Maine.
- The base amount is the average QREs over the last three years.
- Carryforward: Unused credits can be carried forward up to 15 years.
Credit calculation
- 5% of QREs exceeding the base amount
- 7.5% of basic research payments made to qualified universities or scientific organizations
Credit limits
- 100% of the corporation’s first $25,000 in tax liability
- 75% of the liability in excess of $25,000
- The credit cannot reduce tax liability below zero
Maine R&D Tax Credit Case Study
An Augusta-based manufacturing company producing medical syringes has claimed the R&D credit for several years. The company applies the credit each year for engineering and development activities.
The company qualified for the federal R&D Tax Credit of $464,333 and an additional $65,833 in Maine state R&D Tax Credit.
FEDERAL | MAINE | |||
Year | Total QREs | Credit | Total QREs | Credit |
2024 | $1,500,000 | $129,500 | $1,500,000 | $17,500 |
2023 | $1,250,000 | $121,333 | $1,250,000 | $12,500 |
2022 | $1,150,000 | $112,000 | $1,150,000 | $15,833 |
2021 | $1,050,000 | $101,500 | $1,050,000 | $20,000 |
Total | $4,950,000 | $464,333 | $4,950,000 | $65,833 |
Federal R&D Tax Credit Summary
| Year | Total QREs | Credit |
| 2024 | $1,500,000 | $129,500 |
| 2023 | $1,250,000 | $121,333 |
| 2022 | $1,150,000 | $112,000 |
| 2021 | $1,050,000 | $101,500 |
| Total | $4,950,000 | $464,333 |
Maine R&D Tax Credit Summary
| Year | Maine Credit |
|---|---|
| 2024 | $17,500 |
| 2023 | $12,500 |
| 2022 | $15,833 |
| 2021 | $20,000 |
| Total | $65,833 |
Criteria for Qualifying Research Activities
The four-part test below defines what counts as qualified research activities
Purpose of the Research
The activity should develop or improve a business component, such as a product, process, software, formula, technique, or invention, by enhancing functionality, performance, reliability, or quality.
Resolving Uncertainty
The work must address technical uncertainties, such as determining the optimal design, method, or approach to achieve the desired outcome. The results should not be known in advance.
Systematic Experimentation
Eligible research must follow a structured experimentation process, including trial and error, modeling, simulation, or testing alternatives to reach the intended improvement.
Technological Basis
The activity must rely on hard sciences such as engineering, physical or biological sciences, or computer science. Artistic, social science, or routine data collection work does not qualify.
Why the R&D Tax Credit Matters ?
Since 1981, the R&D Tax Credit has helped businesses save billions in federal and state taxes. The credit enables companies to hire more staff, expand R&D, invest in facilities, and drive innovation. Thousands of businesses across multiple industries take advantage of this benefit each year.