By Published On: July 22, 2022

Have Unique Opportunity to Sell Unused Credits

Recent statistics show that there are over 14,000 manufacturers located throughout the great state of Pennsylvania.  Many of these companies are focused on producing goods within the chemicals, food and beverage, fabricated metals and custom machinery sectors.

As it relates to the Research and Development (R&D) tax credit, each year, hundreds of innovative Pennsylvania businesses claim this federal incentive as a means to reduce their tax liability.  In addition to income tax, certain eligible small businesses can also utilize the credit to offset Alternative Minimum Tax and payroll taxes.

Even so, many of these same businesses fail to recognize that they may be eligible for additional tax savings via the Pennsylvania R&D state credit.  This credit was created as a way to promote business growth and foster development within the commonwealth, and it can be utilized by eligible Pennsylvania businesses to offset corporate net income tax and the Pennsylvania personal income tax.

There are some critical differences between the federal and state credits, but in general, the requirements associated with claiming the state credit largely follow those of the federal.  Thus, if you’re a Pennsylvania company already claiming the federal R&D tax credit, it’s definitely worth looking into whether and if the PA state credit may serve as additional value.

What’s also interesting to note, is that the state provides PA businesses unable utilize the credit with a unique opportunity to sell it.


For more information on the R&D credit in Pennsylvania, check out “Pa. R&D Credit: Still Time to Apply, but Not Much” on CPA Now, a blog series from the Pennsylvania Institute of Certified Public Accountants. The article was authored by TCGs Margaret Krajcer, JD, Vice President and General Counsel.

About the Author: Michael Krajcer

Michael Krajcer, JD, CPA, is founder and President of TCG. He has spent his entire 35 year career working with the Research and Development Tax Credit. This includes a decade of experience auditing businesses who claimed it, and over 20 years of experience helping U.S. companies navigate through it. He has also resolved dozens of IRS and state audits of credit claims.