Idaho · research and development · ID-RD-001
Research Activities Credit
Publication revised September 24, 2026. Sourcebook page 96.
Credit amount / calculation
5% of qualifying Idaho research expenditures over the base amount plus applicable basic-research component.
Business fit and eligible activity
Qualifying Idaho research can generate a state credit. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
A wood-products company can miss this credit by assuming that "research" means white coats and laboratories. In practice, qualifying work can arise in process engineering, product development, automation, drying, recovery, and software. A logging company has a narrower path, but equipment-control, software, or process-development work can sometimes qualify if it satisfies the same technical tests.
Illustrative business benefit
A hardwood mill spends $320,000 on a documented project to improve recovery from low-grade logs using scanner changes, controlled test runs, software adjustments, and revised sawing patterns. Assume $200,000 is ultimately treated as the relevant qualified or excess research base. At 5%, the state credit would be about $10,000 before program caps and tax-liability limits. The company would need records showing the uncertainty, alternatives tested, people involved, and results - not simply a year-end estimate of 'engineering time.'
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Identify the technical uncertainty and start contemporaneous project records before trying to calculate the credit.
Official sources
- Idaho State Tax Commission — Business Income Tax Credits (tax.idaho.gov)
Related programs
Idaho Business Advantage Credits
generally
Qualifying expansions meeting investment, jobs, wage and benefit tests can receive enhanced tax credits.
Investment Tax Credit
3% of qualifying investment
Broad statutory credit for qualified Idaho investment, including many depreciable manufacturing assets.
Tax Reimbursement Incentive
Up to
Substantial expansions can negotiate a refundable credit based on new state tax revenues.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.