The Washington R&D tax credit, explained
Washington has no state R&D tax credit. Companies here can still claim the federal R&D credit.
Last verified July 2026 against Washington State Department of Revenue guidance.
The short answer
No. Washington does not have a state research and development tax credit today. The state once offered a High Technology Business and Occupation tax credit for qualified R&D spending, but it expired January 1, 2015, and the legislature has not replaced it.
Where that leaves Washington startups
Washington also has no personal or corporate income tax. Its main business tax is the business and occupation tax, a gross-receipts tax that does not allow deductions for expenses, so even a reinstated R&D credit would work differently than the income-tax credits most other states use.
That does not mean Washington companies are out of options. They can still claim the federal R&D credit for qualified research performed in the state, and for a startup, that credit is often worth more in the near term than a small state credit would be.
How it stacks with the federal credit
Because there is no state credit, the main opportunity for a Washington company is the federal R&D credit, worth roughly 6% to 10% of qualified research spending. Startups under $5 million in revenue can apply up to $500,000 of it against payroll tax each year, instead of waiting until they owe income tax.
Consider a Seattle software startup with 14 engineers and an average salary of $125,000, or about $1.75 million in wages. If qualified research spending comes to $1.5 million for the year, a federal rate near 9% would produce roughly $135,000 in credit, most of which the company could apply directly against its payroll tax bill instead of its Washington B&O tax, since the two are unrelated. This is an example. Actual credit depends on wages, contractor costs, and how much of the work qualifies.
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Claiming the federal credit instead
Since Washington has no state credit, there is no state form or state eligibility test to worry about here. Eligibility for the federal credit follows the same four-part test used everywhere: research has to be technological, aimed at eliminating uncertainty, involve a process of experimentation, and try to improve a product or process.
Washington companies claim the federal credit on IRS Form 6765, filed with the company's federal return, and startups that qualify for the payroll tax offset make that election on the same form.
Claimship prepares the federal research study and the Form 6765 package. Your CPA is the one who files your federal return.
Official source: Washington State Department of Revenue.
Carryforward and deadlines
There is no Washington deadline or carryforward to track, since there is no state credit. The federal credit follows the federal return deadline, and unused federal credit carries forward for 20 years if a company cannot use all of it against income tax in one year.