Are R&D Tax Credits
Available in Missouri?
Yes. For tax years beginning on or after January 1, 2023, the Missouri Department of Economic Development (DED) allows taxpayers to claim a credit for qualified research expenses (QREs) related to research activities performed within the state. The qualified expenses for this credit must relate to activities that meet the requirements of IRC §41, meaning research must satisfy the IRS Four-Part Test.
Overview of the Credits
Eligible Expenses Include:
Wages for employees performing research at a Missouri facility.
Wages for employees directly supporting or supervising research activities at a Missouri facility.
Supplies used or consumed during research in Missouri.
Portions of third-party research conducted in Missouri.
Credit Calculation:
15% of the difference between current-year QREs and the average QREs for the three prior years, or
20% of the difference if the research is performed in conjunction with a Missouri public or private college or university.
Limits and Carryforward:
The credit is capped at $300,000 per taxpayer per year. If total eligible claims exceed the cap, credits are allocated pro rata, giving priority to new businesses under five years old.
Unused credits may be carried forward for 12 years.
The statewide annual cap is $10 million, with $5 million reserved for minority-owned, women-owned, and small businesses.
Additional Benefits:
Purchases of Missouri-qualified R&D equipment are exempt from state and local sales and use tax.
The program provisions will expire on December 31, 2028.
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.