Texas · research and development · TX-RD-001
Research and Development Franchise Tax Credit - Subchapter T
Publication revised September 24, 2026. Sourcebook page 257.
Credit amount / calculation
Standard Subchapter T calculation: 8.722% of current Texas qualified expenses above 50% of the preceding three-year average. Other rates apply to university research and taxpayers lacking a full base history.
Business fit and eligible activity
New rules effective January 1, 2026 provide a current franchise-tax credit for Texas qualified research. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Illustrative business benefit
With qualifying expenses in each base year, $300,000 this year and a $200,000 three-year average produce ($300,000 - $100,000) x 8.722% = $17,444 before applicable limits. File the required federal research form; eligible no-tax-due entities follow separate refund procedures.
Timing / first action
Tax-year claim: document the eligible expense, hire or placed-in-service date and meet any separate certification deadline. Use the 2026 Subchapter T rules and file federal Form 6765. Check the prohibition involving the former research sales-tax exemption.
Official sources
- Texas Comptroller — 2026 Texas Franchise Tax Report Information and Instructions (comptroller.texas.gov)
Related programs
Certified Historic Structure Rehabilitation Credit
25% of eligible rehabilitation costs under the state credit
A forest-products business rehabilitating a certified historic mill may monetize a Texas franchise-tax credit.
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.