Short answer. You can claim both. Minnesota runs its own credit, 10 percent of your Minnesota research over a base on the first $2 million and 4 percent above, separate from the federal Section 41 credit, so the same in-state work earns both. Beginning with 2025 returns, a company can elect to have part of the credit refunded as cash, and the rest carries forward 15 years.
Key facts
| Claim both? | Yes, on the same Minnesota research |
|---|---|
| Federal rate | 20% regular / 14% ASC |
| Minnesota rate | 10% of the first $2M over a base, 4% above |
| Minnesota refundable? | Partially, by election, beginning with 2025 returns |
| Forms | Form 6765 (federal) + Schedule RD (Minnesota) |
Two credits on the same research
Minnesota computes its own credit on Minnesota expenses; the federal credit runs on your nationwide expenses.
The federal Section 41 credit is claimed on Form 6765 with your federal return. Minnesota's credit is claimed on Schedule RD with the Minnesota return, and the same research performed in Minnesota can support both in the same year.
Minnesota uses the federal Section 41(d) definition of qualified research but applies its own two-tier rate to the Minnesota portion, so the federal work is the basis for the state claim.
Federal Section 41 vs. Minnesota, factor by factor
Minnesota became partially refundable in 2025 and does not allow the federal simplified method.
| Factor | Federal Section 41 | Minnesota |
|---|---|---|
| What it is | Credit for increasing research activities | Minnesota credit for increasing research activities |
| Credit rate | 20% regular / 14% ASC | 10% of the first $2M of QRE over a base, 4% above |
| Refundable | No - a QSB may offset up to $500,000 of payroll tax under Section 41(h) | Partially refundable by election (about 19% of the credit for 2025, 25% for 2026-2027); the rest carries forward |
| Carryforward | 20 years, with a 1-year carryback | 15 years, no carryback |
| Where research must occur | United States | Minnesota only |
| How you claim it | Form 6765 with the federal return | Schedule RD with the Minnesota 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(d) definition, Minnesota research only; the federal simplified method is not allowed |
Where Minnesota differs from federal
Two features set Minnesota apart from the federal credit.
New partial refundability. For tax years beginning in 2025 and later, a company can elect to have a set percentage of the current-year credit refunded in cash, roughly 19 percent for 2025 and 25 percent for 2026 and 2027, with the remainder carrying forward. Before 2025 the credit was fully nonrefundable.
Minnesota only, regular method. Only research conducted in Minnesota counts, and Minnesota does not allow the federal Alternative Simplified Credit method, so the base is computed the regular way. The federal credit has no in-state limit and offers the simplified option.
One evidence base for both
The records that prove the federal claim are what Minnesota relies on too.
Because Minnesota uses the Section 41(d) 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 Minnesota 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 Minnesota 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 Minnesota'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.
- Minnesota Statutes 290.068 (credit for increasing research activities) - Minnesota Office of the Revisor of Statutes
- Minnesota Department of Revenue, Credit for Increasing Research Activities - Minnesota 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 Minnesota state workpaper from one engagement, both built to survive an exam.