Combine State and Federal Benefits for Maximum Savings

Program Overview

Pennsylvania offers R&D tax credits that can be used in addition to federal credits for the same qualifying activities, potentially doubling your tax savings on innovation investments.

Program

Credit Rate
10% of qualifying expenses above your base amount (20% for small businesses)

Program Cap
$60 million available each year

Carryforward
15 years

Transferable
Yes, credits can be sold with approval

Eligibility Requirements

  • Must be subject to Pennsylvania Corporate Net Income Tax or Personal Income Tax
  • Carry out qualified R&D activities within Pennsylvania
  • At least 2 years of R&D spending history required
  • Must be fully compliant with all state tax obligations

  • Eligible Entities

    • C Corporations
    • S Corporations
    • LLCs
    • Partnerships

Qualifying Activities & Expenses

Activities:

Developing and improving software
Optimizing manufacturing processes
Product design and prototyping
Engineering solutions to technical challenges
Environmental and efficiency improvements

Qualifying Expenses:

Wages
R&D staff and direct support personnel

Supplies
Materials used up during research

Contract Research
65% of payments to third-party researchers

Computer Costs
R&D-specific rental or lease costs, cloud hosting

Federal vs. Pennsylvania Credits

FEDERAL CREDIT

PENNSYLVANIA CREDIT

Rate

Rate

20% (simplified method)

10% (20% for small businesses)

Location

Location

U.S.-based research

Pennsylvania-based only

Carryforward

Carryforward

20 years

15 years

Transferable

Transferable

No

Yes (with approval)

REAL EXAMPLE
A company with $3.3M in qualified expenses earned
$359,917 in federal credits + $148,750 in Pennsylvania credits = $508,667 in total savings

Application Process

KEY DATES

Application Opens

August 1

Deadline

December 1

Eligible Period

Expenses from the previous calendar year

Requirements:

  • Federal Form 6765 filed

  • myPATH online application

  • Project documentation

Strategic Advantages

Double Your Savings

Claim both federal and state credits for the same activities

Credit Monetization

Sell unused credits for immediate cash flow

Incremental Benefits

The more you invest in R&D, the greater your credits

Pass-Through Flexibility

Transfer credits to owners or partners

No Sunset

Permanent program for long-term planning

Common Qualification Scenarios

  • Developing new software features or improving existing ones

  • Automating manufacturing or improving production efficiency

  • Creating prototypes or testing new product designs

  • Integrating new technologies into existing systems
  • Solving technical challenges through experimentation

Why Work with Boast?

Maximize Your Credits
Our platform uncovers all eligible activities across federal and state programs

Streamlined Process
Automated documentation and application management

Expert Support
We ensure you meet both federal and Pennsylvania requirements

Proven Results
We help clients capture every dollar they’re entitled to

Next Steps

  • 1
    Assessment: Review your Pennsylvania-based R&D activities to see if you qualify
  • /blog/growth/page/2
    Documentation: Set up proper tracking for eligible expenses and activities
  • 3
    Application: Apply through myPATH by the December 1 deadline
  • 4
    Optimization: Build a strategy to maximize both federal and state benefits

Questions?

Contact our R&D credit specialists to explore your Pennsylvania opportunities.

Related Posts