FAQs: Incentives

Yes. A Qualified Investment is defined as: a cash investment into a Louisiana Entrepreneurial Business by an Accredited Investor which may be in the form of equity, convertible debt, or other types of subordinate debt, as approved by the department. Only the initial principal amount of any debt investment is eligible for the credit.  *The provisions of the 2021 rule changes regarding a Qualified Investment shall apply to applications filed after the date of promulgation, detailed in the Louisiana Register published on August 20, 2021. *

No. The LEB must submit an AITC Reservation Application in calendar year 2021 for an investor to be eligible for AITC tax credits in calendar year 2021.

Yes. The company has the burden of defending against a Public Records Request in court. LED will notify the business of such a request.

The tax credit available in the first year shall become deductible from tax liability in the taxpayers income tax year which occurs twenty-four (24) months from the date LED certifies the amount of the investment.

Three years.

AITC tax credits can only be applied against Louisiana state tax liabilities. An out-of-state investor could benefit by transferring the AITC to a Louisiana taxpayer.

To become a certified LEB for participation under the AITCP, submit a completed application and supporting documentation to angelinvestor@la.gov.

A business may participate in both the LED SSBCI Seed Capital/Venture Capital Program and the LED Angel Investor Tax Credit Program (AITCP).  However, any limited partners and/or members to the equity fund having used capital under the State Small Business Credit Initiative (SSBCI) Program from LEDC during an investment round are not eligible for AITCP.  If LEDC is a limited partner or member of a Seed/Venture capital fund and is investing SSBCI capital into the fund, it is referred to as a SSBCI Fund and must comply with all U.S. Treasury SSBCI Guidance. In order to comply, LEDC Investment shall be made on no less than the same terms and conditions, and with the same expected return on investment, as other private investors. LEDC, which is a department of LED, is a state entity that does not incur a state tax liability nor is eligible to earn state tax credits.  Therefore since LEDC is not eligible for AITC, any transaction that includes LEDC (with SSBCI capital) as a partner or member of the fund is deemed in-eligible for AITC.

As soon as we’ve had a chance to review and clear up any outstanding issues in the application (which we strive to complete as quickly as possible), we will then send the applicant a Initial Certification Letter that acknowledges OEID gets a project’s applicable expenditures of those proposed in the application.

OEID awards credits in the form of a final certification; the Louisiana Department of Revenue will process your tax credit or rebate within 30 to 60 days.

NO. An applicant to the Digital Interactive Media Program is not obligated to expend funds in the state — even after an application has been pre-certified.

.005 x proposed tax benefit with a minimum fee of $500 and a maximum fee of $15,000. Prior to issuance of initial certification letter the applicant shall submit to the office a deposit of the expenditure verification report fee of $7,500 for a production with qualified production expenses projected to be no more than $1 million, and a deposit of $15,000 for those projected to be in excess of $1 million.

Under the law, a company can claim their first expenditure on a project up to six months prior to the date the application was received for the program.

An applicant can apply before beginning production or expending funds in Louisiana.

A specific exclusion in the Digital Media Program prohibits a firm from taking advantage of both the additional Digital Media Incentive as well as LED’s Quality Jobs program for the same employee. However, a firm may have some employees enrolled in the Quality Jobs program, while others are claimed under the Digital Media incentive.

OEID has many business incentives, some of which may be combined with the Digital Interactive Media Incentive. OEID does not allow the same dollar spent to earn credits under multiple programs. Staff can work with your firm to see what you might be eligible for.

There isn’t a maximum amount of tax credits that a project or company can earn, nor is there a cap on the program as a whole.

For the Digital Interactive Media Program, there is no minimum spend required.

An expenditure paid to a Louisiana company that has an active registration with the Louisiana Secretary of State and has a physical presence in the state, posted business hours and at least one full-time employee.

Equipment such as computer hardware and software purchased from a Louisiana business for the direct development of the product is considered eligible. Furniture and fixtures do not qualify for the program.

The simple answer is costs that are directly related to the project development itself. This includes items such as hardware and software, labor and lease costs — but not for costs associated with running the company (administrative, clerical, etc.) or marketing/distributing the product.

Any qualified expenditures can receive the tax credit award of 18%, regardless of whether the labor is performed by Louisiana residents, so long as the work is done in the state of Louisiana. All labor must be verified to have been performed in Louisiana, and any work performed outside of the state would not qualify.

Digital Interactive Media applicants’ qualifying projects are awarded up to a 18% tax credit on qualified production expenses paid to a Louisiana entity/vendor, and labor costs (for Louisiana residents) are awarded up to an additional 7% (an effective 25% total awarded on labor costs paid to Louisiana residents).

No, OEID will assign the CPA to complete a cost verification report.

OEID has full-time staff members whose job it is to help companies through the process of applying for and receiving the Digital Interactive Media tax credit. We strive to continually improve the transparency and ease with which firms can apply and enter the program.

Firstly, you can cover your Louisiana state tax liability. Since the credits awarded in the Digital Interactive Media Program are refundable, the remainder of the credits are considered an overpayment and refunded to the applicant by the Department of Revenue. There is also an option to take the value of the credits as a one-time rebate (any time during the year) at 85% of their original value.

A tax credit is a credit that can be used against Louisiana tax liability. In the case of the Digital Interactive Media program, it’s a credit with an option for an 85% rebate.

NO. It is an incentive that awards state tax credits to producers of Digital Interactive Media.

In the context of Louisiana’s Digital Interactive Media program, it’s essentially an interactive software product (e.g. video game, training software, web platform, etc.) that’s built for commercial export and not for the producer’s internal use.

The Board, composed of individuals appointed by the Governor of Louisiana, reviews and approves applications for certain tax incentive programs, including Enterprise Zone, Industrial Tax Exemption, Quality Jobs and Restoration Tax Abatement.

A qualified employee is a citizen of the United States and who is domiciled in Louisiana or becomes domiciled in Louisiana within sixty days after employment in such position, performing duties in connection with the operation of the business enterprise as a regular, full-time employee.

No, the only jobs eligible are the ones filled with employees hired to work at least 35 hours a week.

A full-time job is a position filled by an employee hired to work for a minimum of 35 hours a week and reported on the company’s ES4.

The Employment Baseline is the median statewide number of employees of an employer, including affiliates during the payroll periods including the twelfth day of the month in the last four months completed prior to the contract effective date. The median is calculated by discarding the months with the highest and lowest number of employees and averaging the number in the remaining two months. There must be at least four months of operation to use the median average, otherwise if there are three or less months of operation with employment prior to the contract effective date, average only the months with employment.

YES. A business must create permanent full-time net new jobs under the following conditions: must increase existing nationwide workforce by 10% (a minimum average of 1 permanent net new job) within the first 12 months of the contract effective date; or create an average of 5 jobs within the first 24 months of the contract effective date.

*** 50% of all permanent net new jobs must meet one of the four Certification Requirements. ***

An Endorsement Resolution is a written motion issued by the local governing authority acknowledging a company’s participation in the Enterprise Zone Program, and stating if a rebate of the local sales taxes will be issued.

Rebate of some local sales/use taxes paid may be available, at the discretion of the local governing authorities in the parish the project is located. An Endorsement Resolution from the local governing authorities must be received prior to the Board of Commerce & Industry approval of the company’s application. For more information on local rebates, please contact the local governing authority where your business is located.

The applicant’s Qualification Certification form is a document submitted within the application that confirms the intended number of permanent net new full-time jobs the applicant will create.

An Advance Notification provides an estimate of your project’s total investment and expected new jobs. An Application is submitted after your project is complete and gives actual figures of the expenditures and investments associated with your project.

The Advance Notification form should be completed through Fastlane, LED’s secure online filing system.

An Advance Notification form is a document notifying Louisiana Economic Development (LED) of an intended project before any construction, hiring, or capital expenditure has been made.

Submit an Advance Notification form and a $250 fee prior to beginning the project (before starting construction, purchasing, or hiring new employees). Business Incentives Services (BIS) will acknowledge receipt of the advance via email and will include instructions on filing the application through Fastlane.

The $3,500 tax credit is available if the net new employee is hired by a participating business that is located in an Enterprise Zone.  Additionally, the $3,500 tax credit is available if the net new employee was receiving an approved form of public assistance, such as SNAP, WIC, unemployment benefits, or Medicaid within 6 months prior to their hire date.

The certification requirements are specified targeted groups from the following areas:

• Residency
• Public Assistance
• Lacking Basic Skills
• Unemployable by Traditional Standards

Generally, businesses participating in the program are not required to locate in an Enterprise Zone. When a company is not located in an EZ and is using residency as a certification requirement, the employees must reside in a Louisiana Enterprise Zone or meet one of the other certification requirements.

Enterprise Zones are economically distressed areas within the state that have high unemployment rates, low per capita income and/or a high number of residents receiving public assistance.

The Enterprise Zone, or EZ program is a jobs incentive program that provides Louisiana income and franchise tax credits to a new or existing business located in Louisiana creating permanent net new full-time jobs and hiring at least 50% of those net new jobs from one of four targeted groups.

The FastLane Help Center is the best place for a user to go to find answers to typically asked questions when it comes to the FNG system.

All customized materials related to the company’s process will be copyrighted to the company.

 Training is generally limited to new employees. However, current employees can be involved if they are moving up in the company.

LED FastStart offers in-depth, world-class, custom employee recruitment and screening with hands-on assessments, as well as customized training for the complete operation. The training is both comprehensive and highly customized, covering specific processes and procedures as well as quality, organizational management and advanced technologies. It is supported with customized video, multiple digital platforms and graphic material.

The training process varies depending on each company’s needs. LED FastStart works with each company until the final employee is hired and trained.

All customized materials related to the company’s process will be copyrighted to the company.

Training is generally limited to new employees. However, current employees can be involved if they are moving up in the company.

LED FastStart works with a wide variety of companies — from advanced manufacturing to corporate headquarters and customer support centers to game development and other digital media facilities.

To qualify, a company must first commit to creating a net of at least 15 new, permanent manufacturing jobs, or a net of at least 50 new, permanent service-related jobs. LED FastStart is a discretionary incentive and each request is evaluated prior to project commencement to ensure all eligibility requirements are met. The type of industry and investment from the company are reviewed as well.

LED FastStart offers in-depth, world-class, custom employee recruitment and screening with hands-on assessments, as well as customized training for the complete operation. The training is both comprehensive and highly customized, covering specific processes and procedures as well as quality, organizational management and advanced technologies, and is supported with customized video, multiple digital platforms and graphic material.

LED FastStart® is a free service provided to qualifying companies operating in Louisiana.

No, only those applications with an advance notification filed after June 24, 2016, are subject to the 2017 rules changes.

Exhibit “B” are resolutions adopted by the parish governing authority (speaking on behalf of the parish and all parish bodies who are located outside the boundary of the affected municipality, where applicable, who receive a millage), the school board, and any municipality (speaking on behalf of the municipality and all municipal bodies who receive a millage) and a letter from the sheriff approving the project in which the manufacturing establishment is or will be located signifying whether each of these authorities is in favor of the project.

To obtain Exhibit B, contact the local governing authorities directly, or contact your local economic development officials.

Yes, if the Estimated Project Ending Date stated in the Advance Notification has not yet passed, a Project Extension Request form can be electronically filed via Fastlane NextGen.  Once the form is reviewed and processed, the date will automatically update.

The Board is composed of individuals appointed by the governor of Louisiana, who review and approve applications for certain tax incentive programs, including Enterprise Zone, Industrial Tax Exemption, Quality Jobs and Restoration Tax Abatement.

The fees associated with the Industrial Tax Exemption can be found here.

A site inspection may be performed by LED to determine if the activity at the site is considered manufacturing. LED will want to see specific assets that are being exempted by the contract and an overview of the manufacturing process.

If the Advance Notification was filed on or prior to June 24, 2016, your contract may be renewed for 5 years at 100% abatement. If the Advance Notification was filed after June 24, 2016 and before July 1, 2018, Exhibits “A” and “B” will determine the length and terms of renewal. These contracts may be renewed for up to three years at up to 80% abatement. If the Advance Notification was filed on or after July 1, 2018, your contract may be renewed for 5 years at 80% abatement.

For all parishes except Orleans, the contract effective date is December 31 of the year in which the assets become operational or complete. For Orleans Parish, the contract effective date is July 1 of the year in which the assets become operational or complete.

Amendments to contracts must be approved by the Board. The appropriate form must be filed. For contracts with Advance Notifications filed after June 24, 2016, local endorsement is necessary if the parish in which the contract is located changes.

Amendments to contracts must be approved by the Board. The appropriate form must be filed. For contracts with Advance Notifications filed after June 24, 2016, local endorsement is necessary if the parish in which the contract is located changes.

New jobs must be permanent, full-time, based at the manufacturing site, and may be employed directly, by an affiliate, or through qualified contract labor. Construction jobs are not considered new jobs.

Exhibit “A” is a fully executed agreement between the department and the applicant specifying the terms and conditions of the granting of the exemption contract.

To obtain Exhibit “A”, LED must first receive and review the application and LDR must subsequently review and issue a letter-of-no-objection or a letter-of-approval. Upon receiving, LED will draft the Exhibit “A” which will be returned to the company for signature. After all required signatures are obtained, the Exhibit “A” may be sent to the Division of Administration for approval.

The SBIR/STTR Retention Grant Program rules are located here. 

All records or material containing proprietary or trade secret information submitted by a developer, owner, or manufacturer shall contain a cover sheet that displays in bold type, “DOCUMENT CONTAINS CONFIDENTIAL PROPRIETARY OR TRADE SECRET INFORMATION.” The developer, owner, or manufacturer shall clearly mark each instance of information which is, in their opinion, proprietary or trade secret information. However, as custodian of such information, there shall be a determination of whether such information is in fact proprietary or trade secret information. 

Grants are used to fund and advance research and commercialization efforts. The recipients can utilize these funds to support and grow their businesses in Louisiana. Examples of eligible uses of funds include:

• Highly skilled new hires
• Business plan development
• Product testing
• Market research
• Intellectual property protection
• Technical work 

Stage 2 disbursements will not be made automatically to recipients of Stage 1 awards. A new application must be submitted which demonstrates that the Stage 1 recipient has met the Stage 2 disbursement requirements. Only Stage 1 recipients are eligible for Stage 2 disbursements. 

Each grant awarded will be divided into two equal amounts and disbursed over a two-year period.

Stage 1: 50% of the Innovation Retention Grant award will be paid upon proof of a Phase I or Phase II SBIR/STTR award.

Stage 2: 50% of the Innovation Retention Grant award will be paid upon the submission of evidence that 50% of the SBIR/STTR Phase I or II award has been received. 

Applications will be reviewed to ascertain compliance with the program requirements in the application period, until the funds available for the Retention Program have been exhausted. The date and time of receipt of the complete application (which includes all required documents) will be used to establish the order for consideration of applications. 

Official Notification of Award may only be issued by the finance, accounting, contracting, or other unit of the agency authorized to commit and obligate the agency under the terms of the Federal SBIR/STTR Solicitation for which an IRG program award is sought. All other forms of notification are not considered official for the purpose of the Innovation Retention Grant program. All applications submitted without an Official Notification of Award will be rejected without consideration. 

The application period for the initial round of Innovation Retention Program funding closed on October 15, 2023. Future application periods will be announced as program funds are authorized by the Legislature. 

Louisiana businesses that have been approved for a federal SBIR/STTR grant may submit an application form to SBIRFund@la.gov during the open application period. 

The Innovation Retention Grant program utilizes state funds appropriated by the Louisiana Legislature in 2022 (Act No. 476). This is a pilot program. Success of the program and future funding is tied to the award of the appropriated money. Total amount of funding expected to be awarded per fiscal year is $1 million, to be divided equally among SBIR/STTR Phase I and II federal grant recipients. 

LED will consider various factors when determining which applications will be awarded funding under the program. Factors that may be taken into consideration include, but are not limited to, business location (to ensure statewide distribution of funds) and best interests of the state. 

Eligible companies are Louisiana small businesses (fewer than 500 employees) that receive an SBIR/STTR Notification of Award dated on or after June 15, 2022 for Phase I or Phase II funding. 

Louisiana’s Musical and Theatrical Production Incentive Program is open to concert, theatrical and other live productions that originate or debut in the State of Louisiana.

The company must file the following documents with LED after the close of each fiscal year during the contract period:

• The Annual Certification Report (ACR) and fee, and the required addendum material, including a copy of the wage reports filed with the Louisiana Workforce Commission (ES4’s) and information about the employee health care plan (coverage summary and cost detail) Certification of Primary Qualification illustrating the company’s eligibility for the program
• The Rebate Spreadsheet illustrating the new direct jobs created
• The Baseline Report illustrating that the company has maintained the baseline jobs that existed prior to the start date of the contract.

* Additional information may be required. These forms can be found in Fastlane.

* LED will notify the Louisiana Department of Revenue (LDR) of the company’s eligibility; the company must then file with LDR to receive the rebate.

No. Advances filed prior to 7/1/2017, must follow the provisions of Act 387. Only advances filed on or after 7/1/17  participate under the provision of Act 386.

It is the applicants responsibility to have an independent Louisiana CPA annually verify that the contract site meets the out-of-state sales requirements using the QJ – AUP 50 % sales out of state.

The Board, composed of individuals appointed by the Governor of Louisiana, reviews and approves applications for certain tax incentive programs, including Enterprise Zone, Industrial Tax Exemption, Quality Jobs and Restoration Tax Abatement.

An Endorsement Resolution is a written motion issued by the local governing authority supporting a company’s participation in the Quality Jobs Program that states the percentage of local sales tax to be rebated to the company.

Although a person can have multiple residences, they can only have one domicile. The determination of domicile can be quite complex, requiring living in Louisiana for at least six months out of the year, plus evidence of intent to remain here permanently. Domicile can be inferred from a totality of a person’s actions and can be supported by documents such as a voter registration card or filing of Resident Tax Return IT 540.

Rebate of some local sales/use taxes paid is available at the discretion of the local governing authority in the parish in which the project is located. The local governing authority must submit an Endorsement Resolution to the Board of Commerce & Industry prior to Board action on the Company’s application. For more information on local rebates, please contact the local governing authority where your business is located.

In order to receive benefits for the creation of new direct jobs as set forth in the contract, companies must also maintain its existing workforce which is determined by calculating the median statewide number of employees:

Contracts with Advances Filed Prior to January 20, 2023:

• Employees, including affiliates, work an average of 30 hours per week, as required by §1105
• Employees work in payroll periods including the 12^th day of the month during the preceding four months completed prior to the contract effective date
• Four months of operation to use the median average are needed – the median is calculated by discarding the months with the highest and lowest number of employees, and averaging the number in the remaining two months. If three or less months of operation with employment prior to the contract effective date, average only the months with employment.

Contracts with Advances Filed on/or After January 20, 2023:

• Employees, including affiliates, work an average of 30 hours per week, as required by §1105
• Employees work in payroll periods including the 12^th day of the month during the preceding six months completed prior to the contract effective date
• Six months of operation to use the median average are needed – the median is calculated by discarding the months with the highest and lowest number of employees, and averaging the number in the remaining four months. If five or less months of operation with employment prior to the contract effective date, average only the months with employment.

An in-state contract is a contract to perform services or supply goods that involves Louisiana jobs, including contracts associated with serving or supplying goods to certain offshore or out-of-state locations. For instance:

• A contract to deliver services or goods to a Louisiana location is considered an in-state contract. This includes contracts with public or private entities that are located outside of the State (e.g., contracts with global companies for their Louisiana locations, contracts with the Federal Government for a Louisiana location).
• A contract to deliver services or goods to an out-of-state location for which services and goods have historically been provided from Louisiana (e.g., provided by Louisiana facilities near state borders) is considered an in-state contract.
• A contract to perform services for or supply goods to an offshore Gulf of Mexico facility in an area that has historically been served from Louisiana (e.g., served from Port Fourchon) is considered an in-state contract.

A1: If the company purchases health care insurance, the value of the plan is the company’s actual cost for individual coverage (employee single). (If the applicant feels that the value of their plan is greater than the cost, a valuation may be performed. However, based on historical reviews, it is rare that the value would differ materially from the actual cost.)
A2: For a self-insured company, LED will determine the value through comparison with the cost of plans providing similar benefits (consulting with an insurance industry expert as needed).

A new direct job is a job or position that did not exist in the State of Louisiana prior to the start date of the contract and meets the requirements of the QJ program. For instance:

• If a company is expanding its workforce by creating 10 new jobs at the contract site, as long as those jobs are created after the start date of the contract and meet the minimum requirements (wages, health care, etc), then those jobs are considered new direct jobs.
• If Company A has a contract to perform services or supply goods in the State and then loses that contract to Company B to supply similar services or goods in the State, then any job gains at Company B associated with the contract change would not be considered new direct jobs.
• If Company A has 20 Louisiana employees and buys Company B, which has an existing QJ contract, then those 20 employees would not be considered new direct jobs. Similarly, if Company A buys Company B, who has 10 Louisiana employees, then those 10 employees would not be considered new direct jobs. If a company or its affiliate within the State of Louisiana has multiple locations in the State, the transferring of employees from one location to another is not considered a new direct job.

Yes, an email or letter addressed to the program managers reflecting the change would suffice, provided that the election is made before the application due date.

The Enterprise Zone Program provides a one-time job tax credit on each new direct job, and the Quality Jobs Program provides up to a 6% payroll rebate on annual payroll for new direct jobs for up to 10 years.

No, you cannot participate in both programs at the same time.

The contract is effective for five years and may be renewed for an additional five years.

The earliest contract start date is the date LED receives the Advance Notification and fee.

• The Annual Certification Report (ACR) and fee, and the required addendum material, including a copy of the wage reports filed with the Louisiana Workforce Commission (ES4’s) and information about the employee health care plan (coverage summary and cost detail) Certification of Primary Qualification illustrating the company’s eligibility for the program
• The Rebate Spreadsheet illustrating the new direct jobs created
• The Baseline Report illustrating that the company has maintained the baseline jobs that existed prior to the start date of the contract.

* Additional information may be required. These forms can be found in Fastlane.

* LED will notify the Louisiana Department of Revenue (LDR) of the company’s eligibility; the company must then file with LDR to receive the rebate.

No.  Advances filed prior to 7/1/2017, must follow the provisions of Act 387. Only advances filed on or after 7/1/17  participate under the provision of Act 386.

The Advance Notification is the document notifying LED of a project before any action has occurred, such as hiring new employees or spending money.

Advance Notification — Filing an Advance Notification is the first step in the process. The Advance Notification is filed through FastLane. The Advance Notification must be filed before hiring, purchasing or construction begins.

Application — An application and fee for the Quality Jobs Program must be filed on the prescribed forms within 24 months after the department has received the advance notification and fee. Upon receipt of the application, fee, and addendum material, the application is reviewed by LED. Once accepted, the application is processed and presented at the next Board of Commerce and Industry meeting.

Contract — After the Board of Commerce and Industry approves the application, a contract is submitted electronically to the applicant for signature. Once returned to LED the contract is then sent to the Board of Commerce and Industry and finally to the Governor for signature.

The Quality Jobs Contract is an agreement between the State of Louisiana and a qualified company that allows the company to receive the benefits of the QJ Program upon meeting all of the program requirements.

It provides a rebate of up to 6% on annual wages for up to 10 years and the election of either a state sales/use tax rebate on capital expenditures or up to a 1.5% project facility expense rebate on the total capital investment, excluding tax exempted items.

The Quality Jobs (QJ) Program provides payroll benefits as an inducement for businesses to locate or expand operations in the State of Louisiana.

The transferable R&D tax credits issues to SBIR applicants are entered into the Louisiana Department of Revenue Tax Registry. Upon the certification of the tax credits, Form R-6135 Credit Utilization Form will be issued by LDR. The applicant must notify LDR within 10 business days of the transfer. All transferable credits must be transferred by the original due date of the return. Please refer to the Revenue Information Bulletin 14-005 that provides more information on transferable tax credits.

R&D tax credits issued to SBIR/STTR applicants are transferable. [R.S. 47:6015 (D)(2)]

If an applicant does not have prior year expenses in Louisiana no base calculation will be needed. The calculation will be based solely on the current year R&D expenses. The base calculation will be based on the average of previous tax years. The calculation will be adjusted in the event there are no previous expenses in a prior year.

For example:

No Previous Years
A company with less than 50 employees incurred $210,000 in tax year 2019 and had no prior year R&D expenditures. There would be no base year. The calculation would be 30% of current years expenditures.

$210,000 x 30%, the 2019 R&D tax credit would be $63,000 – OR –

1 Previous Year
A company with less than 50 employees incurred $210,000 in tax year 2019 and had $100,00 R&D expenditures in tax year 2018.

The base calculation would be prior year times the appropriate percentage ($100,000 x 50%) which would be $50,000. In order to calculate the incremental increase in expenditures the base calculation is subtracted from the current year. The R&D tax credit is 30% of the incremental increase.

$100,000 x 50% = $50,000 base calculation
$210,000 – $50,000 = $160,000 incremental increase
$160,000 x 30% = $48,000 2019 R&D tax credit

2 Previous Years
A company with less than 50 employees incurred $210,000 in tax year 2019 and had $100,00 R&D expenditures in tax year 2018 and $150,000 in tax year 2017.

The base calculation would be the average of the prior year’s times the appropriate percentage ($100,000 + 150,000/2 x 50%) which would be $62,500. In order to calculate the incremental increase in expenditures the base calculation is subtracted from the current year. The R&D tax credit is 30% of the incremental increase.

($100,000 + 150,000/2 x 50%) = $62,500 base calculation
$210,000 – $62,500= $147,500 incremental increase
$147,500 x 30% = $44,250 2019 R&D tax credit

3 previous years applies the same rationale with using the average of the 3 prior years.

The base calculation and credit percentages will vary based on the size of the company.

View Examples of Base Calculations.

Formula:
6765
Average of three previous tax years * 80% = Base Amount
CTY R&D expenditures — Base Amount = increase in LA R&D
Increase in LA R&D * (5% or 10%) = R&D Tax Credit

LQRE – 6765
Average of three previous tax years * 50% = Base Amount
CTY R&D expenditures — Base Amount = increase in LA R&D
Increase in LA R&D * (30%) = R&D Tax Credit

Credits should NOT be claimed on a tax return until certified by LED. If credits are not certified by the return due date, the taxpayer should file and then amend the return upon receipt of any credits.

The term “business component” means any product, process, computer software, technique, formula or invention which is to be (i) held for sale, lease or license or (ii) used by the taxpayer in a trade or business of the taxpayer.

Qualified research expenses generally include wages, supplies and contract research costs.

Wages — Qualified wages are for qualified services that directly relate to the research activities and are paid or incurred by the taxpayer. Qualified services include direct supervision, direct support or direct performance of qualified research. General or administrative wages generally do not qualify. For example, an allocated portion of the purchasing or receiving department’s wages would not qualify because these are indirect costs and are incidental to research activity.

Supplies — Supplies include tangible property that is consumed directly by the research activity or that is utilized in the development of a prototype. The supplies must be used in the conduct of qualified research. Supplies do not include land, improvements to land or property subject to the allowance for depreciation. Utilities (phone and electricity), small tools and allocations of total shipping cost do not qualify as supply expenses.

Contract research — Contract research expenses are amounts paid to non-employees (outside consultants) to perform qualified research. The taxpayer must enter into written agreement prior to performance of the research and must bear the costs even if the research is unsuccessful. The consultant must perform the research within Louisiana. If the research is conducted within and outside of Louisiana, only the expenditures incurred within Louisiana qualify. Only 65% of the Louisiana expense qualifies for the credit.

Yes, however, your company must submit a completed Verification Report.

The following research activities are specifically excluded by statute:

1. Research undertaken outside Louisiana.
2. Research conducted in the social sciences, arts or humanities.
3. Ordinary testing or inspection of materials or products for quality control.
4. Market and consumer research.
5. Research relating to style, taste, cosmetic or seasonal design.
6. Advertising and promotional expenses.
7. Management studies and efficiency surveys.
8. Computer software for internal use of the taxpayer, unless it meets additional tests.
9. Research to locate and evaluate mineral deposits, including oil and gas.
10. Acquisition and improvement of land and of certain depreciable or depletable property used in research (including the annual depreciation deduction).
11. Research conducted after the beginning of commercial production.
12. Research related to adaptation of an existing business component.
13. Research related to duplication of an existing business component from a physical inspection, plans, blueprints, detailed specifications, etc.
14. Funded research — Any research funded by any grant, contract, or otherwise by another person (or governmental entity).
15. Professional Service Firms, Custom Manufacturing and Custom Fabricating.

Research activity is considered “qualified research” if it meets all of the following four requirements of Internal Revenue Code (IRC) §41(d)(1):

• Qualify as a business deduction under IRC §174.
• Be undertaken to discover information that is technological in nature.
• Be undertaken to discover information intended to be useful to develop a new or improved business component of the taxpayer.
• Substantially all activities involve a process of experimentation. “Substantially all” means 80% or more of the research activities involve a process of experimentation.

A qualified research activity must meet all four tests to be considered for the Louisiana R&D Credit. Apply the tests separately to each business component of the taxpayer.

Louisiana law generally conforms to the federal research credit as enacted under the Small Business Job Protection Act of 1996. However, Louisiana does make some modifications. “Basic research” and “qualified research” must be conducted in Louisiana to qualify.

The Louisiana R&D Credit is claimed on your Louisiana income tax return for the year you paid or incurred qualified research and development expenses or carry forward up to 5 years. Credits cannot be claimed on a return until they have been certified by Louisiana Economic Development.

The R&D tax credit provides a tax credit for companies that have paid or incurred qualified research expenses while conducting qualified research in Louisiana. You can receive a credit up to 30%, based on the size of the company. The Louisiana R&D Credit reduces income or franchise tax. Credits cannot be claimed on a return until they have been certified by Louisiana Economic Development.

Yes. If an application is being prepared and/or submitted by someone other than the owner of the property, submit a Resolution of the Board of Directors or Resolution of Property Owners and related documents to execute the application on behalf of the company or individual owner of the property for which the application is being filed.

Five-year abatement of ad valorem property taxes on the increased value of the property from the restoration, improvement, development or expansion of an existing structure.

A resolution is a written motion issued by the local governing authority approving participation in the Restoration Tax Abatement Program. It may also be called an Approval Resolution. This is required before an application can be presented to the Board of Commerce and Industry.

A document notifying LED of an intended project before any construction or capital expenditure has been made. The earliest date construction can begin is the date an Advance Notification is submitted online successfully. If construction begins before an Advance Notification is submitted expenditures made prior to this date may not be included as part of the investment.

Acknowledgement of receipt of Advance Notification by LED does not guarantee eligibility to participate in the program.

A fee schedule is provided in the Getting Started section with the required fees.

Submit online in FastLane an Advance Notification and $250 filing fee prior to project start (i.e., before beginning construction)

The Restoration Tax Abatement Program is an incentive created for municipalities and local governments to encourage the expansion, restoration, improvement and development of existing structures in downtown development districts, economic development districts and historic districts.