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State program

Utah Research and Development Credit

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  • Offset only

Last reviewed November 2026

At a glance

  • Jurisdiction: Utah (UT)

  • Credit name: Credit for Increasing Research Activities in Utah (Utah Code §59-7-612 for corporations; §59-10-1012 for individuals). Credit code 12.

  • Administering agency: Utah State Tax Commission

  • Rate(s) and base: Three components:

    • 5% of Utah qualified research expenses above the base amount
    • 5% of payments to qualified organizations for basic research in Utah above the base amount
    • 7.5% of total Utah QREs for the year, with no base reduction

    The base amount follows IRC §41(c) and §41(h) with Utah changes: the alternative incremental credit does not apply, gross receipts count only if sourced to Utah, and taxpayers may irrevocably elect start-up company treatment.

  • Refundable? No.

  • Transferable? No.

  • Carryforward: 14 years for the two 5% components. The 7.5% component cannot be carried forward. No carryback.

  • Annual cap / proration: None.

  • Pre-approval / application and deadline: None. Claim the credit on the annual return.

  • Forms: There is no separate form. Claim the credit as code 12 on the return's credit schedule: TC-20 (corporations), TC-40A Part 4 (individuals), or TC-41 (fiduciaries). Pass-through entities report it on TC-65 to owners. Keep supporting documents. The machinery and equipment research credit (code 13) expired for tax years beginning after 2010. Only remaining carryovers can still be used.

  • Sunset / recent changes: No sunset. The credit continues even if the federal credit ends. No 2026 changes to the credit. SB 60 (2026) cut the corporate and individual income tax rate from 4.5% to 4.45% for tax year 2026.

What it is

Utah has a three-part, nonrefundable research credit for research done in Utah: two incremental 5% credits and a flat 7.5% credit on all Utah QREs.

Who can claim it

  • Corporations and individuals, including owners of pass-through entities, with QREs for in-house or contract research done in Utah, or with payments to qualified organizations for basic research in Utah.

How it is calculated

  1. 5% research credit: Utah QREs minus the Utah base amount, multiplied by 5%. The base amount is computed under §41(c) using Utah-sourced gross receipts.
  2. 5% basic research credit: basic research payments to qualified organizations above the base amount, multiplied by 5%.
  3. 7.5% credit: total Utah QREs for the year, multiplied by 7.5%.
  4. Claim the research credits in the year the expenses are incurred, and the basic research credit in the year the payment is made.
  5. Carry unused amounts from steps 1 and 2 forward up to 14 years. Any unused 7.5% credit is lost.

How to claim it

  • Enter credit code 12 on the applicable credit schedule (TC-20, TC-40A Part 4 or TC-41). Pass-through entities report owners' shares on TC-65 K-1s.
  • No separate form or application. Keep workpapers:
    • Utah QREs by component
    • base computation with Utah-sourced gross receipts
    • basic research payments
    • start-up election, if made

Recent changes

  • 2024–2026: no amendments to §59-7-612 or §59-10-1012. The section was last amended in 2016.
  • SB 60 (2026): reduced the income tax rate to 4.45% for tax year 2026, which slightly lowers the value of deductions but not of the credit.
  • HB 587 (2026): originally would have required an add-back of federally expensed domestic research costs, amortized over 60 months. Those provisions were removed and the bill did not pass.

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 Utah and other locations, how Utah amounts reconcile to federal Form 6765, the Utah credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Utah tax.

  • How were Utah QREs separated from QREs in other states, for both in-house and contract research?
  • How was the base amount computed? Were gross receipts limited to Utah-sourced receipts, and was the start-up election made?
  • How do the three components reconcile? Was any 7.5% amount wrongly carried forward?
  • Do the basic research payments go to qualified organizations for research in Utah?
  • Does the carryforward schedule show when each 5% amount originated?

Common weak spots

  • Carrying forward the 7.5% component.
  • Using total gross receipts instead of Utah-sourced receipts in the base.
  • Counting contract research performed outside Utah.
  • Not keeping records, because no form is filed with the return.

Next steps

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.

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