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Massachusetts Life Sciences Center Tax Incentive Program Overview

Article

September 17, 2025

The Massachusetts Life Sciences Center (MLSC) Tax Incentive Program continues to be a cornerstone of the Commonwealth’s strategy to attract and retain life sciences companies. With a renewed application window opening in mid-December 2025 and closing in mid-February 2026, the program offers a suite of refundable and non-refundable tax benefits aimed at fostering job creation, capital investment, and research and development (R&D) activity across the state.

MLSC Tax Incentive Program Company Eligibility

To qualify for MLSC tax incentives , a company must meet the following criteria:

Be engaged in life sciences R&D, commercialization or manufacturing
Be registered to do business in Massachusetts (MA) and file a 2025 MA return
Employ at least 10 permanent full-time (≥35 hours/week) MA employees (FTE)
Commit to hiring and retaining net new FTEs in MA through December 31, 2028, with thresholds based on company size and location:
- Five net new FTEs for companies with <50 employees
- Five net new FTEs for companies located in Gateway Municipalities or designated counties (Barnstable, Berkshire, Bristol, Dukes, Franklin, Hampden, Hampshire, Nantucket, Plymouth, Worcester)
- 10 net new FTEs for all other companies

MLSC Tax Incentive Applicant Information Request

Applicant companies need to provide the following information.

Jobs Information

Current total number of W-2 FTEs company-wide
Current total number of W-2 FTEs in MA
Number of net new W-2 FTE hires committed for calendar year 2025
Average salary of new hires in 2025
Breakdown (in %) of job types to be created (e.g., manufacturing, R&D, regulatory, etc.)
Location(s) of new jobs, if the company has multiple MA facilities

Credit Items

Incurred Food and Drug Administration (FDA) user fees
Pre-existing net operating losses (NOLs)
Pre-existing excess Section 38M research credit
Total cost of qualifying property acquired, constructed or erected during the tax year

Calculating the Credit

Qualified companies may receive up to $33,000 per net new job created. The MLSC determines the credit awarded as follows:

$18,000 base credit
+$5,000 for companies with <50 employees
+$5,000 for companies headquartered in remote areas
+$5,000 for manufacturer jobs

The total annual program cap is $40 million, increased from $30 million in prior years.

Allocating the Awarded Credit

Once awarded, a company can allocate the total credit received across the following benefits, allowing a growing life sciences company, in particular, to customize the MLSC tax incentives to its unique needs.

Life Sciences Refundable Investment Tax Credit (ITC)	Provides a credit equal to 10% of the cost of qualifying property acquired, constructed, or erected during the tax year and used exclusively in MA. Credit may reduce the company’s tax liability to zero. 90% of the balance of credits remaining is refundable.
Life Sciences Refundable FDA User Fees Tax Credit	Provides a credit equal to 100% of the user fees paid on or after June 16, 2008, to the FDA on the application to manufacture a human drug in MA. For eligibility, more than 50% of the R&D costs for the drug must have been incurred in MA. Credit may reduce the company’s tax liability to zero. 90% of the balance of credits remaining is refundable. Note: A life sciences company claiming the FDA user fees credit may not also deduct the FDA user fees on its return.
Life Sciences Refundable Jobs Tax Credit	Life sciences companies claiming the credit must commit to the creation of a minimum of 50 net new permanent full-time positions in MA. Credit may reduce the company’s tax liability to zero. 90% of the balance of credits remaining is refundable. Note: Excess credit amounts may not be carried forward to subsequent tax years. Companies may include the new jobs generated to qualify for the program in the 50 net new permanent full-time positions in MA, but cannot claim the credit unless they create 50 new jobs.
Refundable §38M Research Credit	Life sciences companies subject to the corporate excise may also receive the research credit for a portion of its qualified research expenses under General Laws Chapter 63, § 38M. Credit may reduce the company’s tax liability to zero. 90% of the balance of credits remaining is refundable.
Life Sciences Research Tax Credit	A separate Life Sciences Research Credit may be available for certain expenditures, including expenditures for research related to legally mandated clinical trial activities performed both inside and outside of MA, which do not qualify for the General Laws Chapter 63, § 38M research credit. Note: Unused credit may be carried forward for 15 years. This credit is not refundable.
Extension of Net Operating Losses (NOLs)	Allows life sciences companies to carryforward NOLs from five to 15 years.
Deduction of Qualified Orphan Drug Expenses	Allows a deduction for certain clinical testing expenses related to orphan drugs, which are disallowed as a deduction under § 280C(b) of the Code.

In addition to the credits listed above, companies that enter the program will receive designation as an R&D company for sales tax purposes and sales tax exemption for certain property.

Example: MLSC Tax Incentive Program in Practice

Company Profile

A biotechnology company headquartered in Hampden County, MA, is engaged in both R&D and manufacturing. As of December 31, 2025, the company employs 42 FTEs. It plans to hire 10 net new FTEs in 2026 and retain them through at least December 31, 2028. The company qualifies for enhanced credit due to its size, location in a remote county and the manufacturing nature of the new roles.

Step 1: Determine Credit Per Job

Base credit: $18,000
Small company bonus (<50 employees): +$5,000
Remote location bonus (Hampden County): +$5,000
Manufacturing job bonus: +$5,000
Total per job = $33,000

Step 2: Calculate Total Available Credit

10 new jobs × $33,000 = $330,000 total available credit

Step 3: Allocate Credit Across Incentives

The company could choose to allocate its $330,000 credit across several eligible incentives:

Life Sciences Refundable ITC
Allocation: $120,000
Use: Applied to capital equipment purchases used exclusively in MA
Refundable FDA User Fees Tax Credit
Allocation: $80,000
Use: Offset user fees paid for a new drug application, with >50% of R&D conducted in MA
Refundable § 38M Research Credit
Allocation: $90,000
Use: Based on qualified research expenses under G.L. c. 63, § 38M
Life Sciences Research Credit (Non-refundable)
Allocation: $40,000
Use: For clinical trial-related R&D not eligible under § 38M; carried forward up to 15 years

Your Guide Forward

Cherry Bekaert’s State Credits & Incentives team is dedicated to assisting businesses in navigating the Massachusetts Life Sciences Center Tax Incentive Program. From evaluating eligibility and calculating potential credits to optimizing allocation strategies across refundable and non-refundable benefits, our team is here to support your company’s growth and innovation goals in the Commonwealth.

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