Wisconsin R&D Tax Credit

Wisconsin R&D Tax Credit

Funds Wisconsin firms with state tax credits for qualifying innovation to support commercialization and job creation.

Eligibility · United States · US-WI

The Wisconsin R&D Tax Credit is a partially refundable state income and franchise tax credit administered by the Wisconsin Department of Revenue (DOR) under Wis. Stat. §71.07(4k), §71.28(4), and §71.47(4). The program encompasses three distinct research credit tracks: a General Research Credit for increasing qualified Wisconsin research activity (5.75% of QREs above the base amount), an Internal Combustion Engine Research Credit for engine designs aimed at reducing emissions or improving fuel efficiency (11.5% rate), and an Energy Efficient Products Research Credit for qualifying energy-efficient product R&D (also 11.5% rate). An alternative simplified credit method is available for all three tracks. QREs must satisfy the four-part test of IRC §41 — qualified purpose, technological in nature, elimination of uncertainty, and process of experimentation — and must be conducted in Wisconsin, with DOR applying IRS examination guidance in audits.

A significant 2017 reform introduced partial refundability: up to 15% of the total credit amount is refundable upon filing, meaning companies with insufficient Wisconsin tax liability can recover a portion of excess credits as a cash payment. The remaining nonrefundable balance carries forward for up to 15 years. The credit is claimed on Schedule R attached to the Wisconsin income or franchise tax return (Form 1, M4, or equivalent), with no pre-approval process. Companies that qualify for the engine or energy-efficient research tracks effectively double the credit rate to 11.5%, making those tracks particularly valuable for clean-energy and automotive-adjacent companies. The Wisconsin DOR program is estimated to generate $60–80 million in annual credit claims statewide, reflecting a broad base of eligible manufacturing, biotech, and technology filers.

Eligibility is sector-agnostic for the general track, with for-profit entities — corporations, S-corporations, partnerships, and similar pass-throughs — the primary claimants. Universities and research organizations may participate where Wisconsin tax liability exists. The 15% refundable component differentiates Wisconsin from many peer-state programs that offer only nonrefundable credits, making it attractive for early-stage companies with limited current-year tax exposure. An associated sales/use tax exemption for tangible personal property used exclusively in qualified research (Wis. Stat. §77.54(57m)) further reduces the net cost of Wisconsin-based R&D programs.