Technology Tax Credits
Research Expense Tax Credit
The credit is based on a percentage of the federal Credit for Increasing Research Activities. Limitations: the credit is limited to 5% of the excess qualified research expenses over the previous three-year average plus 7.5% of the basic research payments under IRC § 41(e)(1)(A). The credit is further limited to 100% of the first $25,000 in tax liability plus 75% of the tax liability in excess of $25,000. The credit cannot be carried back, but can be carried forward for up to 15 years.
Super Research and Development Credit
The credit is based on qualified research payments exceeding 150% of the average for the three-year period prior to the effective date of the credit. Limitations: the credit is limited to 50% of the tax otherwise due after all other credits. Further, the credit cannot reduce tax liability below the amount due the previous year after credits. The credit cannot be carried back, but can be carried forward for up to five years.
High-Technology Investment Tax Credit
The credit is based on the adjusted basis of eligible equipment. Limitations: the credit is based on the adjusted basis of eligible equipment. Limitations: the credit is limited to high-tech equipment purchased (or leased) by businesses engaged primarily in high-tech activities. The credit cannot reduce tax to an amount below the previous year’s tax after credits. The credit cannot be carried back, but can be carried forward for up to five years.
Sales Tax Exemptions
Maine state sales tax exemptions are available for manufacturing, R&D, custom computer programming, fuel & electricity, biotechnology and clean fuel vehicle sales.
Manufacturing:
Sales of machinery and equipment used by the purchaser directly and primarily in the production of tangible personal property for later sale or use is eligible for a sales tax exemption. In addition, items consumed or destroyed directly or primarily in production, and repair and replacement parts for qualified production equipment are exempt from sales tax. Also, any manufacturer is exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing facility.
Research and Development:
Sales of machinery and equipment used by the purchaser directly and exclusively in research and development is eligible for a sales tax exemption.
Custom Computer Programming:
Any custom computer programming purchased by a business is exempt from sales tax. If a standard program is purchased, then customized, the cost of the standard program would be taxable and the customizing, if separately stated, would be nontaxable.
Fuel & Electricity For Use In Manufacturing:
Manufacturers are exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing operation.
Biotechnology:
Sales of machinery, equipment, instruments and supplies used by the purchaser directly and primarily in a biotechnology application are eligible for a sales tax exemption.
Partial Clean Fuel Vehicle Sales Exemption:
For businesses that sell clean fuel vehicles to the general public, the exemption amount is based on a portion of the sale or lease price of a clean fuel vehicle.
