Emergency-related state tax relief available for taxpayers located in two counties of Michigan impacted by severe weather.
Base Amount
Base Amount
Base Amount
To qualify for the Research and Development (R&D) Tax Credit, an eligible business must have Michigan Qualified R&D Expenses (MQREs) for the expense year that exceed its base amount.
The base amount is the average MQREs from the three prior calendar years in which MQREs were greater than zero. Estimates are not allowed; the base amount must be based on actual expenses. The credit is subject to audit, and incorrect amounts may result in the credit being reduced or denied.
Eligible businesses are guided through the base amount calculation when filing their R&D Credit Application in Michigan Treasury Online (MTO).
MQREs and the base amount must be determined using calendar-year expenses.
The expense year is the calendar year when MQREs were incurred.
Calculate the Base Amount
The base amount for the R&D Tax Credit is calculated by averaging the eligible business’s MQREs over the three calendar years prior to the expense year.
To calculate the base amount:
- Determine the eligible business’s MQREs for the three calendar years before the expense year.
- Add the MQREs from the years with expenses.
- Divide the total by the number of years with MQREs. This is the base amount.
Note: If any of the three prior calendar years was a partial calendar year, it should still be treated as a full year when calculating the base amount.