Short answer. Delaware lets you take the larger of two rates: 10 percent of the increase in your Delaware research over a base, or 50 percent of Delaware's apportioned share of your federal credit. A small business doubles both to 20 and 100 percent. The credit is fully refundable, and it is for research conducted in Delaware, not for being incorporated there.
Key facts
| Rate (method 1) | 10% of the increase over a Delaware base (20% small business) |
|---|---|
| Rate (method 2) | 50% of the apportioned federal credit (100% small business) |
| Refundable | Yes, fully refundable |
| Statute | 30 Del. C. 2070-2075 |
| Form | BUS-RDC |
Two rates, you elect the larger
Delaware gives you a choice between an incremental rate and a share of your federal credit.
Method one is 10 percent of the excess of your Delaware qualified research expenses over a Delaware base amount. Method two is 50 percent of Delaware's apportioned share of your federal credit computed under the federal alternative simplified method. You elect whichever produces the larger credit.
A small business doubles both rates: 20 percent instead of 10, and 100 percent instead of 50. Small business here means average annual gross receipts under the federal Section 41(c) threshold, $20 million in the relevant prior years.
Fully refundable
Delaware's standout feature is that the credit pays cash.
If you cannot use the full credit against Delaware tax, the unused amount is paid to you as a refund. The 2017 Commitment to Innovation Act removed the old statewide dollar cap and made the credit fully refundable, so a pre-profit company with no Delaware tax can still receive it.
The credit is requested on Form BUS-RDC, filed with the Delaware Division of Revenue. The request is a separate step from the return with its own filing deadline, so build it into your timeline.
Where the research happens, not where you incorporate
This is the rule that trips up Delaware-incorporated companies.
The credit is for qualified research conducted in Delaware. Being incorporated in Delaware, which many companies are for legal reasons, does not earn it if the engineering happens elsewhere. The qualified expense definition follows federal Section 41, limited to the Delaware-performed portion.
More on Delaware's R&D credit
The full state overview, the federal Section 41 work it builds on, and related state guides:
Sources
Every claim on this page traces to a primary authority. Each source below is independent and verifiable.
- Delaware Code Online, Title 30 Chapter 20 Subchapter VIII (30 Del. C. 2070-2075) - State of Delaware
- Delaware Form BUS-RDC instructions (2025) - Delaware Division of Revenue
- 26 U.S.C. ยง 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
Get documentation built to survive an exam
R&D Binder produces the federal Section 41 binder and the Delaware state workpaper from one engagement, both built to survive an exam.