The credit may be claimed starting on year 2001 reports. The credit applies to expenditures made on or after January 1, 2000. The starting point is the amount of qualifying expenditures used in calculating the federal income tax credit. The Texas statute explicitly incorporates the federal definitions by reference. Qualifying expenditures include incremental expenditures and basic research payments.
Expenditures are qualified whether they are for in-house research or contract research.
However, each of these categories is subject to limitations as provided under Section 41 of the Internal Revenue Code. These are payments made to educational institutions, scientific organizations and similar entities for qualified research they perform on the taxpayer's behalf. The expenditures must be made for research that is technological in nature and to be applied to develop a new product or substantially improve an existing one. Texas Research Only. Double Benefit in Strategic Investment Areas.