At a glance
- Jurisdiction: Maine (ME)
- Credit name: Research Expense Tax Credit (36 M.R.S. § 5219-K)
- Administering agency: Maine Revenue Services (MRS)
- Rate(s) and base: The credit has two parts:
- 5% of Maine qualified research expenses above the Maine base amount. The base is the average annual Maine QREs for the three preceding tax years.
- 7.5% of basic research payments determined under IRC §41(e)(1)(A), for research conducted in Maine.
- Refundable? No
- Transferable? No. Pass-through owners claim their proportionate share.
- Carryforward: 15 years. Credit disallowed by the annual limitation also carries forward.
- Annual cap / proration: No program cap. The annual usage limit is:
- For corporations: 100% of the first $25,000 of Maine tax plus 75% of tax above $25,000, measured before other credits.
- For individuals and corporations with tax of $25,000 or less: the credit is limited to the tax.
- The credit cannot reduce tax below zero.
- Pre-approval / application and deadline: None. The credit is claimed on the annual return.
- Forms: Research Expense Tax Credit worksheet, with federal Form 6765 attached. Report the credit on:
- Form 1040ME, Schedule A (line 16 on the 2024 form)
- Form 1041ME, Schedule A
- Form 1040C-ME, Schedule A
- Form 1120ME, Schedule C (line 1f on the 2024 form)
- Sunset / recent changes: No sunset. The separate "Super Credit for Substantially Increased Research and Development" (§ 5219-L) applied only to tax years beginning before January 1, 2014. P.L. 2025, c. 650, Part K (L.D. 2212) partially decouples Maine from the federal §174A deduction for 2025–2029.
What it is
Maine offers a non-refundable incremental credit for research performed in Maine. It is based on Maine QREs above the three-year average, plus a separate component for basic research payments to qualified organizations. The definitions follow IRC §41, but Maine's base is a simple three-year average rather than the federal fixed-base percentage.
Who can claim it
- Taxpayers: corporations, individuals, estates and trusts subject to Maine income tax that incur qualified research expenses for research conducted in Maine.
- Pass-through owners: partners, members, shareholders and beneficiaries claim their share in proportion to their ownership interest.
- Related groups: the State Tax Assessor may aggregate controlled groups and commonly controlled entities. Members of a Maine combined return apply the credit first against their own tax, then against other members' tax.
How it is calculated
| Line | Item |
|---|---|
| 1–2 | Basic research payments above the federal base for Maine research × 7.5% |
| 3 | Maine QREs for the year (from Form 6765) |
| 4 | Base: Maine QREs for the three prior years ÷ 3 |
| 5–6 | (Line 3 − line 4) × 5% |
| 7 | Carryforward from prior years |
| 8 | Total available credit, subject to the annual limitation |
Annual limitation for corporations: 100% of the first $25,000 of tax plus 75% of tax above $25,000, before other credits. Unused credit carries forward 15 years.
How to claim it
- Complete the MRS Research Expense Tax Credit worksheet for the tax year.
- Attach the worksheet and federal Form 6765 to the return. Pass-through owners must also attach the federal Schedule K-1 and the entity's Form 6765, and enter the entity's name, EIN and their ownership percentage.
- Report the credit on the credit schedule of the return:
- 1040ME Schedule A
- 1041ME Schedule A
- 1040C-ME Schedule A
- 1120ME Schedule C
- MRS may request supporting documents before processing the return.
Recent changes
- P.L. 2025, c. 650, Part K (L.D. 2212), effective July 29, 2026, retroactive to tax years beginning in 2025:
- §174A addback: Maine requires an addback of the federal §174A deduction for domestic research expenditures. The addback is 100% for 2025, 70% for 2026, 50% for 2027, 30% for 2028 and 10% for 2029. A later subtraction recovers the amounts added back. Businesses with average annual gross receipts of $31 million or less are exempt.
- Conformity: Maine's Internal Revenue Code conformity date moved to December 31, 2025.
- Effect on the credit: none. The credit itself is unchanged.
- P.L. 2023, c. 360, Part B: amended the limitation subsection.
- Super Credit (§ 5219-L): remains expired. It applied only to tax years beginning before 2014.
Likely examiner questions
These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Maine and other locations, how Maine amounts reconcile to federal Form 6765, the Maine credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Maine tax.
- Provide the Research Expense Tax Credit worksheet and federal Form 6765, and reconcile Maine QREs to the federal QREs.
- Show that the research was conducted in Maine. Explain how wages, supplies and contract research were sourced to Maine.
- Provide Maine QREs for each of the three prior years used in the base, with support.
- For basic research payments, provide the written agreements with qualified organizations and show the research was performed in Maine.
- Show how the annual limitation was applied, and provide the 15-year carryforward schedule by year of origin.
- For pass-through owners, provide the K-1 and the entity's Form 6765 and ownership percentage.
- For 2025 and later returns, show how the Maine §174A addback was computed, or why the small-business exemption applies.
Common weak spots
- Using the federal fixed-base percentage instead of Maine's three-year average base.
- Non-Maine research included in Maine QREs.
- Annual limitation not modeled for corporations with tax above $25,000, so the expected benefit is overstated.
- Carryforwards not tracked by year of origin, so credits expire unused or are used after 15 years.
- Claiming the expired Super Credit.
Next steps
- Run a mock audit for Maine
- Official source: Maine Revised Statutes, 36 M.R.S. § 5219-K (opens in a new tab)
- Run the eligibility checker
- Book a scoping call with Swanson Reed (opens Swanson Reed's booking calendar in a new tab)
- Contact us: +1 (469) 206-4335 or hello@creditarmor.ai
Important
This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.