The Utah R&D tax credit, explained
Utah's R&D credit combines a 7.5% flat rate with a 5% incremental rate, all nonrefundable and self-claimed.
Last verified July 2026 against Utah State Tax Commission guidance.
The short answer
Utah has an active state R&D tax credit with no sunset date. It is self-claimed directly on the tax return, with no application or certification needed.
How the Utah credit works
The credit has three parts: 5% of Utah qualified research spending above a base amount, 5% of payments for basic research above a base, and 7.5% of total current-year Utah qualified research spending with no base subtraction. The credit is nonrefundable.
The two 5% components carry forward for 14 years if unused. The 7.5% component does not carry forward at all. A company has to use it in the year it is earned or lose it.
How it stacks with the federal credit
Utah uses the federal definition of qualified research, so the same documentation supports both the state and federal claims.
Example: a Utah engineering startup with 15 employees and an average salary of $95,000 spends $1,425,000 on qualified research in Utah. The 7.5% flat component alone is worth $106,875, and it has to be used against Utah tax liability this year or it disappears. If the company's base amount is $900,000, the excess of $525,000 also earns the 5% incremental rate, adding $26,250 that can carry forward for up to 14 years if unused. The same $1,425,000 in spending can generate a federal credit of roughly $85,500 to $142,500, and a company under $5 million in revenue can apply that federal credit against up to $500,000 of payroll taxes a year.
Because the 7.5% piece expires if unused, a Utah startup with little or no state tax liability should plan for that portion carefully, since it is the largest part of the credit and cannot be banked for a profitable year later.
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Eligibility and how to claim it
Any company doing qualified research in Utah can claim this credit. There is no industry restriction and no pre-approval step.
The company keeps records that match federal IRC section 41 documentation standards, since Utah does not require a separate application or certificate.
Corporations claim the credit on Form TC-20. Individuals and pass-through owners claim it on Form TC-40A using credit code 12, filed with the Utah State Tax Commission. Claimship prepares the research study and expense breakdown by component. The company's CPA enters the credit on the return.
Official source: Utah State Tax Commission.
Carryforward and deadlines
There is no application deadline, since the credit is claimed directly on the annual return. The 5% components carry forward for 14 years. The 7.5% component must be used in the year it is earned.
Because the 7.5% portion is use it or lose it, companies with little Utah tax liability in a given year should talk to their CPA before year end about timing research spending or other tax planning that affects how much of the credit they can actually use.