Short answer. You can claim both. Massachusetts runs its own credit, 10 percent of your Massachusetts research over a base plus 15 percent of basic research payments, separate from the federal Section 41 credit, so the same in-state work earns both. The Massachusetts credit is nonrefundable for most companies but carries forward an unusually long time, and certified life-sciences companies can take it as a 90 percent refund.
Key facts
| Claim both? | Yes, on the same Massachusetts research |
|---|---|
| Federal rate | 20% regular / 14% ASC |
| Massachusetts rate | 10% over a base + 15% of basic research (or a 10% simplified method) |
| Massachusetts refundable? | No, except a 90% refund for certified life-sciences companies |
| Forms | Form 6765 (federal) + Schedule RC (Massachusetts) |
Two credits on the same research
Massachusetts computes its own credit on Massachusetts expenses; the federal credit runs on your nationwide expenses.
The federal Section 41 credit is claimed on Form 6765 with your federal return. The Massachusetts credit is claimed on Schedule RC with the corporate excise return, and the same research performed in Massachusetts can support both in the same year.
Massachusetts uses the federal definition of qualified research but applies its own rates to the portion of that research conducted in Massachusetts, so the federal work is the basis for the state claim.
Federal Section 41 vs. Massachusetts, factor by factor
Massachusetts uses a definition frozen to the 1991 federal rules and an unusually long carryforward.
| Factor | Federal Section 41 | Massachusetts |
|---|---|---|
| What it is | Credit for increasing research activities | Massachusetts research credit |
| Credit rate | 20% regular / 14% ASC | 10% of the excess over a base, plus 15% of basic research payments; or a 10% simplified method |
| Refundable | No - a QSB may offset up to $500,000 of payroll tax under Section 41(h) | No, except certified life-sciences companies may take a 90% refund |
| Carryforward | 20 years, with a 1-year carryback | 15 years, with an unlimited carryforward for the limitation-capped portion; no carryback |
| Where research must occur | United States | Massachusetts only |
| How you claim it | Form 6765 with the federal return | Schedule RC with the corporate excise return |
| 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 of qualified research, Massachusetts research only |
Where Massachusetts differs from federal
Two features set Massachusetts apart from the federal credit.
A frozen federal definition. Massachusetts defines qualified research by reference to Section 41 as it stood in 1991, so it does not pick up later federal changes such as the 14 percent Alternative Simplified Credit or the Section 41(h) payroll offset. The state credit uses its own rates and its own simplified method.
A long carryforward, mostly nonrefundable. Unused credit carries forward 15 years, and the portion capped by the excise limitation carries forward indefinitely. The credit is not refundable except for companies certified under the state life-sciences program, which can take a 90 percent refund.
One evidence base for both
The records that prove the federal claim are what Massachusetts relies on too.
Because Massachusetts uses the Section 41 definition of qualified research, the four-part test analysis and the wage, contractor, and supply records that substantiate your federal credit under Treas. Reg. 1.41-4 support the Massachusetts claim, limited to the in-state share. You build the evidence once.
R&D Binder documents the federal Section 41 four-part test that both credits stand on, with Massachusetts 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 Massachusetts'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.
- Massachusetts Research Tax Credit (M.G.L. c.63 s.38M) - Massachusetts Department of Revenue
- Massachusetts 2024 Schedule RC instructions - Massachusetts Department 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 Massachusetts state workpaper from one engagement, both built to survive an exam.