California R&D tax credit calculator

The California research credit on Form FTB 3523: the 15% regular credit with its fixed-base and 50% minimum-base rules, the 24% basic research component for corporations, the 2024 alternative incremental credit, the California alternative simplified credit (3% or 1.3%) for tax years 2025 and later, the reduced-credit election factors, and, if you enter your tax, how much of the credit you can apply this year under the $5,000,000 business credit limitation.

It is built for understanding how inputs flow through the California computation. It is not a filing tool and does not decide whether your research qualifies.

Always required

• Tax year
• Credit computation method
• Taxpayer type

Depending on your selections, or optional

• Qualified wages for research conducted in California
• Qualified supplies for research conducted in California
• Contract research paid for research conducted in California, and whether the payee is a qualified research consortium
• Computer rental or lease costs
• California fixed-base percentage and California gross receipts for the 4 preceding tax years (regular credit and AIC)
• California QREs for the 3 preceding tax years (alternative simplified credit)
• Basic research payments and base period amount (C corporations)
• California tax after other credits, research credit carryover and other business credits applied (optional, to model what you can use this year)

Amounts should be supported by records. For the federal QRE definitions see qualified research expenses.

• 2024: regular credit or alternative incremental credit. 2025 and 2026: regular credit or California alternative simplified credit. Methods are never borrowed across tax years.
• Regular credit: 15% of California QREs over the base amount, where the base is the fixed-base percentage (capped at 16%) times average California gross receipts and never less than 50% of current QREs. Corporations add 24% of basic research payments over the base period amount.
• 2024 alternative incremental credit: 1.49%, 1.98% and 2.48% of QREs in the bands above 1%, 1.5% and 2% of average gross receipts.
• 2025+ alternative simplified credit: 3% of QREs over one sixth of the prior three years' QREs, or 1.3% of current QREs if any of those years had none. This is California's rate, not the federal 14%.
• Reduced credit under IRC §280C(c): 91.16% for corporations, 87.7% for individuals, estates and trusts, 98.5% for S corporations.
• $5,000,000 business credit limitation for tax years 2024 through 2026 limits the credit applied, not the credit generated. Credit blocked only by the cap can be elected refundable on FTB 3870 at 20% a year over five years.
• Unused credit carries forward until exhausted and is never carried back.

The result step shows every input, each intermediate value with its formula and form line, warnings, assumptions and the credit you can apply if you entered your tax.

2023: Tax year 2023 is not modeled. Use the 2023 Form FTB 3523 and its instructions.

2027: Tax year 2027 is not modeled. The $5,000,000 limitation is scheduled to end for tax years beginning on or after January 1, 2027; verify when the 2027 form is published.

* Carried forward from the latest published form, pending verification.

• Eligibility is not tested. The calculator assumes every amount you enter is a qualified research expense for research performed in California.
• S corporation entity-level use (one third of the credit against the 1.5% tax) and the IRC §41(g) limit on pass-through owners are not modeled.
• Passive activity limits, alternative minimum tax interactions and the minimum franchise tax floor are not modeled.
• Combined reporting groups: the $5,000,000 cap applies at the group level; enter group-level figures if that is your situation.
• Tax year 2026 uses the 2025 rules until the 2026 Form FTB 3523 is published VERIFY when the 2026 FTB 3523 is published.

Tax years modeled

2024, 2025, 2026

Rules last verified

November 8, 2026

Official authority

Franchise Tax Board (FTB)

Verified for

2024, 2025

Sources

11 official sources

Researched by

BLMC research team (Phase 0 draft, pending client review)

This calculator provides an estimate based on the information entered and the rules modeled for the selected tax year. It does not determine whether a taxpayer qualifies, and it is not tax advice. Rules were read in the official form, its instructions and the agency guidance listed below.