Short answer. You can claim both, and Delaware is unusually generous: its credit is refundable, so unused credit is paid to you as cash. You elect either 10 percent of your Delaware research over a base or 50 percent of your federal Section 41 simplified credit apportioned to Delaware, and a small business with under $20 million in receipts doubles those to 20 and 100 percent. The federal credit is not refundable for most filers.
Key facts
| Claim both? | Yes, on the same Delaware research |
|---|---|
| Federal rate | 20% regular / 14% ASC |
| Delaware rate | 10% over a base, or 50% of the federal ASC (doubled for small businesses) |
| Delaware refundable? | Yes, fully refundable |
| Forms | Form 6765 (federal) + Form BUS-RDC (Delaware) |
Two credits on the same research
Delaware computes its own credit on Delaware expenses, and you can tie it directly to your federal credit.
The federal Section 41 credit is claimed on Form 6765 with your federal return. Delaware's credit is claimed on Form BUS-RDC, and the same research performed in Delaware can support both in the same year.
Delaware uses the federal definition of qualified research and lets you elect to compute the state credit as a percentage of your federal simplified credit, so the federal work feeds the state claim directly.
Federal Section 41 vs. Delaware, factor by factor
Delaware is fully refundable and can be computed as a share of the federal simplified credit.
| Factor | Federal Section 41 | Delaware |
|---|---|---|
| What it is | Credit for increasing research activities | Delaware research and development credit |
| Credit rate | 20% regular / 14% ASC | 10% of Delaware QRE over a base, or 50% of the federal ASC apportioned to Delaware (20% / 100% for a small business) |
| Refundable | No - a QSB may offset up to $500,000 of payroll tax under Section 41(h) | Yes, unused credit is paid as a cash refund |
| Carryforward | 20 years, with a 1-year carryback | Not applicable; the credit is refundable |
| Where research must occur | United States | Delaware only |
| How you claim it | Form 6765 with the federal return | Form BUS-RDC, with federal Form 6765 attached |
| Claim alongside the other? | Yes, on the same underlying QRE | Yes, on the same underlying QRE |
| Documentation | Four-part test and QRE substantiation (Treas. Reg. 1.41-4) | Uses the Section 41 definition, Delaware research only |
Where Delaware differs from federal
Two features set Delaware apart from the federal credit.
Refundable, and tied to the federal number. Since 2017 the Delaware credit is fully refundable, so a company with little Delaware tax receives the excess as cash rather than carrying it forward. You can elect to compute it as 50 percent of your federal Section 41 simplified credit apportioned to Delaware, which links the state amount to the federal one. The federal credit is not refundable, though a qualified small business can offset up to $500,000 of payroll tax under Section 41(h).
Doubled for small business. A company with average annual gross receipts of $20 million or less doubles the rates, to 20 percent of Delaware research over a base or 100 percent of the apportioned federal simplified credit. There is no statewide cap.
One evidence base for both
The records that prove the federal claim are what Delaware relies on too.
Because Delaware uses the federal definition of qualified research and can compute the credit from your federal simplified credit, the four-part test analysis and the wage, contractor, and supply records that substantiate your federal credit under Treas. Reg. 1.41-4 are the same records Delaware relies on, limited to the in-state share.
R&D Binder documents the federal Section 41 four-part test that both credits stand on, with Delaware handled as a state add-on from the same evidence. Whether your facts qualify, and which credits to claim, is a determination for your CPA.
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. § 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute
- IRS, About Form 6765 - Internal Revenue Service
- Treas. Reg. § 1.41-4 (recordkeeping and substantiation of qualified research) - 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.