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State program

Wisconsin Research and Development Credit

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  • Partly refundable

Last reviewed November 2026

At a glance

  • Jurisdiction: Wisconsin (WI)
  • Credit name: Wisconsin Research Credits: research credit for increasing research; credit for internal combustion engine research; credit for certain energy-efficient products research (Wis. Stat. §§71.07(4k), 71.28(4), 71.47(4))
  • Administering agency: Wisconsin Department of Revenue (DOR)
  • Rate(s) and base:
    • Increasing research: 5.75% of Wisconsin QREs above 50% of the average Wisconsin QREs for the three preceding taxable years, or 2.875% of current-year QREs if there were none in any of those three years.
    • Internal combustion engine research and energy-efficient products research: 11.5% on the same base, or 5.75% if there was no prior-year QRE history.
  • Refundable? Partly. For taxable years beginning after December 31, 2023, up to 25% of the current-year research credit is refundable (15% for 2021–2023, 10% for 2018–2020). The refund is the lesser of 25% of the current-year credit and the current-year credit left after offsetting tax.
  • Transferable? No.
  • Carryforward: 50 taxable years for the nonrefundable balance (2025 Wisconsin Act 220, enacted April 8, 2026; previously 15 years). The 50-year period also applies to previously claimed credits that were still unused, unrefunded and unexpired as of April 10, 2026, the act's effective date.
  • Annual cap / proration: None.
  • Pre-approval / application and deadline: None. Claim the credit on the annual return.
  • Forms: Schedule R (Research Credit, which computes the refundable portion) and the credits schedule for your return type (Schedule CR for corporations). Partnerships, LLCs and S corporations report pass-through credits to owners on Schedule 3K-1/5K-1.
  • Sunset / recent changes: No sunset. Act 220 (2026) extended the carryforward to 50 years. 2025 Wisconsin Act 190 extends the qualified research sales and use tax exemption to contract research providers starting July 1, 2026.

What it is

Wisconsin offers three research credits for qualified research done in Wisconsin, all computed like the federal ASC. The credits offset Wisconsin income or franchise tax. Up to 25% of the current-year credit can be refunded, and the remaining balance carries forward for up to 50 years.

Who can claim it

  • Corporations, and individuals, including partners, LLC members and S corporation shareholders. Partnerships, LLCs and tax-option (S) corporations compute the credit but cannot claim it themselves. It passes through to their owners.
  • The QREs (as defined under IRC §41, with Wisconsin modifications) must be for research done in Wisconsin.
  • The 11.5% credits require research related to designing internal combustion engines (including engine components and fuel systems), or to certain energy-efficient products, such as energy-efficient lighting systems, building automation and control systems, and automotive batteries for hybrid-electric vehicles.

How it is calculated

  1. Determine Wisconsin QREs for the current year and each of the three preceding years.
  2. Subtract 50% of the three-year average from current-year QREs.
  3. Multiply the excess by 5.75%, or 11.5% for engine or energy-efficient products research. If there were no QREs in any of the three prior years, use 2.875% (or 5.75%) of current-year QREs.
  4. Apply the credit against tax. The refundable amount is the lesser of 25% of the current-year credit and the current-year credit left after offsetting tax. Carryforwards are not refundable.
  5. Carry the remaining nonrefundable balance forward for up to 50 years.

How to claim it

  • Compute the credits and the refundable portion on Schedule R and include it with the Wisconsin return. Corporations also report the credits on Schedule CR.
  • Pass-through entities report each owner's share on Schedule 3K-1 or 5K-1. Owners claim the credit on their own returns.
  • No pre-approval or application. File with a timely return.

Recent changes

  • 2023 Wisconsin Act 19: raised the refundable portion to 25% for taxable years beginning after December 31, 2023.
  • 2025 Wisconsin Act 220 (SB 482), enacted April 8, 2026, published April 9, 2026, effective April 10, 2026: extends the carryforward of unused research credits under §§71.07(4k), 71.28(4) and 71.47(4) from 15 to 50 years. Under Section 73(1) of the act, the change applies retroactively to all research credits carried over from earlier taxable years that, on the act's effective date, had not been used to offset tax, had not been refunded and had not expired under the former 15-year rule. Credits that had already expired under the 15-year rule are not revived.
  • 2025 Wisconsin Act 190 (AB 670): from July 1, 2026, the sales and use tax exemption for machinery, equipment, consumables, fuel and electricity used in qualified research also covers businesses providing contract research services in Wisconsin. Buyers give the seller Form S-211 or S-211E.

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

  • Where was each research activity performed, and how were Wisconsin QREs separated from non-Wisconsin QREs?
  • What were your Wisconsin QREs for each of the three preceding years, and what documents support them?
  • For the 11.5% credits: how does the research relate to internal combustion engines or a qualifying energy-efficient product?
  • How was the refundable portion computed, and were any carryforwards wrongly included in it?
  • Does the carryforward schedule show the origin year of each credit amount?
  • For pass-through credits: do the Schedule 3K-1 or 5K-1 amounts match each owner's return?

Common weak spots

  • Including non-Wisconsin wages or contract research in Wisconsin QREs.
  • Claiming the 11.5% rate for general product research that does not fit the engine or energy-efficient product categories.
  • Computing the refund on total available credit (including carryforwards) instead of the current-year credit.
  • Pass-through entities claiming the credit at the entity level.
  • Prior-year QREs that are not documented.

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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