Nebraska Advantage Research and Development Tax Credit
Nebraska Department of Revenue
15% of the federal §41 research credit (35% for campus research)
Researched for this program: 5 rejection traps · 7 required documentsWhat decides this award ↓
Nebraska credit: 15% of your federal R&D credit
Nebraska's research tax credit (Nebraska Advantage Research and Development Act) equals 15% of the federal credit allowed under IRC §41 for research in Nebraska (apportioned for firms operating in and outside the state), or 35% of the federal credit for research on a Nebraska college or university campus or at a university-owned facility. The credit can be used to obtain a refund of Nebraska sales and use taxes paid or against income tax liability (Neb. Rev. Stat. 77-5804, as amended by LB901, operative July 1, 2026). No business firm may first claim the credit for a tax year beginning after December 31, 2033.
- Funding type
- Tax Credit
- Level
- State
- Amount
- 15% of the federal research credit allowed under IRC §41 (or as apportioned to Nebraska); 35% of the federal credit for research expenditures on a Nebraska college or university campus or at a university-owned facility (Neb. Rev. Stat. 77-5803). The credit may be used to obtain a refund of state sales and use taxes paid or against income tax liability (77-5804).
- Realistic amount
- A Nebraska company with a $60,000 federal §41 credit on its Nebraska research earns a $9,000 Nebraska credit (15%); if that research were done on a Nebraska university campus, $21,000 (35%).
- Deadline
- Rolling — claimed annually on Nebraska income tax return
- Status
- active
- States
- NE
- Payment model
- tax offset
Who qualifies
- Must conduct qualified research activities physically located within Nebraska following federal IRC §41 four-part test
- Qualified research expenses include: wages of Nebraska-based employees performing, supervising, or supporting research; Nebraska supplies consumed in research; 65% of Nebraska contract research payments
- All Nebraska income-tax-filing entities eligible: C-corporations, S-corporations, LLCs, partnerships, sole proprietors
- Credit equals 15% of the federal research credit allowed under IRC §41 (35% for research on a Nebraska college or university campus or at a university-owned facility), apportioned to Nebraska for firms operating in and outside the state; the credit may be used to obtain a refund of state sales and use taxes paid or against income tax liability
- No business firm may first claim the credit for a tax year beginning after December 31, 2033 (Neb. Rev. Stat. 77-5806)
- No minimum revenue, employee count, or project size requirements
- Research must satisfy all four prongs of the §41 test: technological in nature, developing/improving a business component, conducted under uncertainty, and through experimentation
What it covers
Eligible expenses
- Wages of Nebraska-based employees directly performing qualified research activities
- Wages of Nebraska-based employees directly supervising or supporting qualified research
- Supplies and materials consumed or destroyed in Nebraska-located research
- 65% of payments to contractors for qualified research conducted in Nebraska
- Computer rental for Nebraska-located qualified research
Ineligible expenses
- Research conducted outside Nebraska
- Research funded or reimbursed by a third party (government contracts, client-funded R&D)
- Social sciences, arts, humanities, cosmetic design changes
- Market research and consumer preference testing
- Research after commercial production begins
- Routine quality control and data collection without technological uncertainty
- Capital equipment purchases
How to apply
-
1
Compute your federal §41 research credit
Compute the federal research credit allowed under IRC §41. Firms operating in and outside Nebraska apportion it to Nebraska.
~6 hrs
-
2
Separate campus research
Identify research done on a Nebraska college or university campus or at a university-owned facility: the credit on that portion is 35% of the federal credit instead of 15%.
~2 hrs
-
3
Apply the 15% credit rate
Multiply the (apportioned) federal §41 credit by 15%, or by 35% for the campus-research portion.
~1 hrs
-
4
Complete Nebraska Schedule III-B
File Schedule III-B (Research and Development Tax Credit) with your Nebraska income tax return. The credit is computed as a percentage of your federal §41 credit. Attach to Form 1120N (C-corps), Form 1120-SN (S-corps), Form 1040N (individuals), or applicable partnership return.
~3 hrs
-
5
Use the credit
Use the credit against Nebraska income tax liability, or file quarterly claims for a refund of state sales and use taxes paid (after filing the income tax return for the year the credit was first allowed), per Neb. Rev. Stat. 77-5804.
~2 hrs
-
6
Retain supporting documentation
Keep Nebraska-specific QRE documentation: employee timesheets by project with Nebraska location, supply invoices, contractor agreements. Retain at least 3 years from the return due date. Nebraska DOR audits of R&D credits align with federal §41 documentation standards plus Nebraska-location evidence.
~3 hrs
The credit is a percentage of your federal §41 credit, so compute the federal credit first. Research done on a Nebraska university campus earns 35% instead of 15%, and the credit can be taken as a refund of Nebraska sales and use tax paid, which helps a company with little income tax.
Deadline & timing
Claimed on Nebraska Schedule III-B (Research and Development Tax Credit) filed with the Nebraska income tax return. Nebraska corporate income tax returns are due the 15th day of the 4th month after fiscal year end (April 15 for calendar-year filers). Extensions available.
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