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State program

Texas Research and Development Incentive

A restructured incentive delivered as a sales and use tax exemption on qualifying research materials and equipment.

Run a mock audit for TexasOfficial source (opens in a new tab)
  • Offset only
  • Pre-approval required

Last reviewed October 2026

Program overview

Texas historically allowed taxpayers to elect between a franchise tax credit and a sales tax exemption for research materials. Legislation replaced the franchise tax credit with an expanded and simplified sales and use tax exemption for tangible personal property directly used in qualified research, effective for periods beginning in 2026. Companies must hold a registration number from the Texas Comptroller and issue exemption certificates to suppliers at the point of purchase.

Eligibility

Taxable entities engaged in qualified research in Texas that register with the Texas Comptroller for a research and development registration number.

Benefits

Exemption from Texas sales and use tax on the purchase, lease or rental of depreciable tangible personal property used in qualified research.

Caps, deadlines and forms

Caps and limits

No annual cap is stated for this program.

Deadlines

Claimed on the annual return; no separate application deadline is stated.

Forms

Filing forms are listed by the revenue authority: official source (opens in a new tab).

Texas IDR questions

What an examiner is likely to ask about this credit. S1–S7 apply to every state claim; the rest come from this program's own rules.

  1. S1Confirm the research was physically performed within Texas.
  2. S2Provide the Texas qualified research expense calculation and base amount.
  3. S3Reconcile Texas expenses to the federal Form 6765.
  4. S4Show how wages and supplies were apportioned between Texas and other locations.
  5. S5Provide the Texas return and credit schedule for each year claimed.
  6. S6Show the carryforward schedule for unused Texas credits.
  7. S7Confirm the entity claiming the credit is the entity subject to Texas tax.
  8. TX-1Provide the pre-approval, certification or application filed for the Texas credit, with its filing date.

Draft questions for illustration, reviewed by a specialist before any engagement.

Common weak spots

  • Expenses for research performed outside Texas included in the Texas claim.
  • Missing or late pre-approval: the application or certification was not in place when required.
  • Base amount computed from incomplete historical records.

See how your claim holds up

The mock audit drafts these questions for your own claim and scores the evidence behind each answer.

Run a mock audit for Texas

Information on this page is general in nature, not tax advice. Program details change frequently; always confirm current rules with the relevant revenue authority or engage a specialist before acting. Last reviewed October 2026.

Find out what your research actually qualifies for

A scoping conversation takes thirty minutes and costs nothing. You leave with a view on eligibility, likely credit range and the documentation you would need.

Free R&D mock audit: completely free. Book a call or email hello@creditarmor.ai for a login.

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