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About the Credit: Starting with tax returns filed after January 1, 2014, Texas taxpayers can claim the Texas R&D state credit to offset a portion of their franchise tax or use it towards sales and use tax exemption on the purchase or lease of depreciable, tangible property used in qualified research in Texas. Our experts can assist you with everything from Austin federal credit to Houston, Dallas and everywhere between in the Lone Star State. The credit rates for the Franchise Tax Credit are the following in the state of Texas:
- 2.5% for companies who have less than 3 years of QRE’s and did not work through a university.
- 3.125% for companies who have less than 3 years of QRE’s, but did work through a university.
- 5% for companies who have 3 years of QRE’s, but did not work through a university.
- 6.125% for companies who have 3 years of QRE’s and did work through a university.
Notes: The allowable Franchise Tax Credit in any one period, including carry forward amounts, cannot surpass 50% of the franchise tax liability for that period.
Texas R&D Tax Credit Filing Instructions
To claim the Research and Development (R&D) tax credit in Texas, businesses generally have two options: a sales and use tax exemption on depreciable tangible personal property used in qualified research, or a franchise tax credit based on qualified research expenses. To claim the franchise tax credit, which is often the primary R&D tax benefit for many businesses, a taxable entity must file their Long Form Franchise Tax Report (Forms 05-158-A and 05-158-B). Alongside this, they must include two crucial schedules: the Credits Summary Schedule (Form 05-160) and the Research and Development Activities Credits Schedule (Form 05-178). Businesses must also ensure they meet the specific eligibility criteria for qualified research expenses and activities as defined by the Texas Tax Code, which often align with federal IRC Section 41 guidelines, and maintain thorough documentation of all R&D expenditures. The credit can be carried forward for up to 20 years and is generally 5% of the amount by which current year qualified research expenses exceed a base amount (50% of the average QREs from the three preceding tax years). If contracting with higher education institutions, a higher credit rate may apply.
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Texas R&D Tax Credit Filing Instructions
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ICE Thermal Harvesting’s patented system captures excess heat from drilling fluid, engine exhaust, and cooling systems. This heat is transferred to a working fluid via heat exchangers, which then drives an Organic Rankine Cycle (ORC) unit to generate electrical power. This process allows drilling operations to convert waste heat into usable electricity, reducing reliance on external power sources and enhancing energy efficiency.
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Ice Thermal Harvesting’s advancement represents a step forward in integrating sustainable practices into traditional energy extraction methods, showcasing how innovation can drive efficiency and environmental responsibility in the energy industry.
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Fort Worth, Texas Office
1120 South Freeway
Suite 123
Fort Worth, TX 76104
Phone: (817) 769-8168
