The Delaware R&D tax credit, explained
Delaware refunds its R&D credit in full, worth 10% of qualified spend, or 20% for companies under $20 million in revenue.
Last verified July 2026 against Delaware Division of Revenue guidance.
The short answer
Yes, Delaware has a state R&D tax credit, and it stands out because it is fully refundable. If the credit is bigger than the company's Delaware tax bill, the state pays out the difference in cash.
How the Delaware credit works
The standard rate is 10% of Delaware qualified research spending above a base amount, or a company can instead choose an alternative method tied to 50% of Delaware's share of the federal alternative simplified credit.
Small businesses, defined as companies with average gross receipts under $20 million, get a boosted rate: 20% under the standard method, or 100% under the alternative method. Most early-stage startups fall into this small business category.
How it stacks with the federal credit
Delaware's refundable credit stacks well with the federal R&D credit, since both can put real cash back into a young company instead of just reducing a tax bill that does not exist yet.
The federal credit is typically worth 6% to 10% of qualified spend, and a startup under $5 million in revenue can apply up to $500,000 of it against payroll taxes each year.
Example: a 5-person Delaware team with $450,000 in qualified salaries could see a federal credit of roughly $32,000 to $45,000. As a small business under Delaware's rules, the same spend could add a refundable state credit of around $90,000 at the 20% rate, paid out even if the company owes little or no Delaware tax.
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Eligibility and how to claim it
Delaware's credit is open to companies with qualified research expenses connected to work done in Delaware, using the same core definition of qualified research as the federal credit.
A company applies by filing Form 2070AC with the Delaware Division of Revenue, which reviews and approves the credit amount before it can be claimed or refunded. This is separate from, but based on, the same research documentation used for the federal Form 6765.
The company's CPA handles the Delaware application and the state tax return. Claimship preps the underlying research study and federal package that supports both filings.
Official source: Delaware Division of Revenue.
Carryforward and deadlines
Delaware requires the credit application, Form 2070AC, to be filed by September 15 of the year after the research spending happened. Missing this window means missing the credit for that year.
Because the credit is refundable, there is no carryforward to track. Once the Division of Revenue approves the amount, the state either reduces the tax bill or issues a refund for the rest.