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Texas provides research and development sales tax exemption or franchise tax credit

Legislation enacted in 2013 and recent guidance issued by the Texas comptroller of public accounts allow taxpayers engaged in qualified research in Texas to claim either (i) a sales and use tax exemption on certain property directly used in qualified research, or (ii) a Revised Texas Franchise Tax (RTFT) credit based on qualified research expenses. The taxpayer cannot claim both the sales tax exemption and the franchise tax credit for the same year. Taxpayers may use the optimal benefit for each period and can switch from the credit to the exemption, and the exemption to the credit, from year to year.

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