Massachusetts offers a powerful mix of statutory and discretionary incentives aimed at fostering research and development (R&D), biomanufacturing and commercialization, as well as net new job creation across the Commonwealth. This guide summarizes the four programs most relevant to innovative and growth-oriented companies, including:
- The R&D Tax Credit
- The Economic Development Incentive Program Credit (EDIPC)
- The Workforce Training Fund Program (WTFP)
- The Massachusetts Life Sciences Center (MLSC) Tax Incentive Program
Massachusetts R&D Tax Credit
The Massachusetts (MA) R&D credit encourages businesses to invest in research and development activities that promote innovation and economic growth in the state, such as developing new or improved products and processes or improving software, among other qualified activities.
Utilization and Carryforwards
The R&D tax credit may reduce corporate excise subject to a statutory minimum tax of $456. A general utilization limit applies of 100% of the first $25,000 of excise and 75% of excise above $25,000. Unused credits may be carried forward, generally up to 15 years. Corporations claim the credit on Schedule RC.
R&D Tax Credit Filing Tip
Massachusetts follows many Section 41 definitions but decouples elements of the base calculation. Confirm your method (Regular vs. Alternative Simplified) each year and model both where basic research payments to universities are material. It is important to maintain documentation that ties qualified research expenses to Massachusetts activities.
Economic Development Incentive Program Credit
The EDIP encourages MA businesses to create jobs, invest in a specific area and expand operations by providing incentives like tax breaks and grants to businesses that commit to these goals.
How Are Credits Determined?
For projects certified on or after January 1, 2017, the Economic Assistance Coordinating Council determines the credit amount case-by-case based on statutory factors such as location, wages and benefits, priority sectors, and competitive circumstances.
In addition to investment-based awards, certified job creation projects may receive a per-job credit of up to $5,000. Awards may be designated refundable; otherwise, utilization is subject to corporate excise limitations and the $456 minimum tax.
Current Practice and Application Process
The Commonwealth indicates that typical Economic Development Incentive Program (EDIP) awards often fall in the $10,000 to $15,000 per-job range for high-impact projects, with actual outcomes varying by sector and location, such as Gateway Cities, rural or small towns, climate technology, advanced manufacturing, and robotics. Applicants engage with the Massachusetts Office of Business Development and apply via the Business Front Door.
Workforce Training Fund Program
The WFTP encourages Massachusetts employers to fund employee training programs that increase productivity, competitiveness and profitability.
What Types of Training Does the WTFP Support?
The WTFP supports a wide range of training topics tailored to employer needs. These include:
- Process Improvement
- Technical and Software Skills
- Supervisory and Leadership Development
- Quality Management Systems
- English for Speakers of Other Languages
- Diversity, Equity and Inclusion
- Climate Change
Employers can work with third-party training vendors or develop customized internal training programs.
Main Components of the WTFP
The WTFP is comprised of two main components: the General Program and the Express Program.
The General Program
The General Program provides grants of up to $250,000 for comprehensive training projects, generally involving large-scale, two-year customized training initiatives.
Participating businesses are required to contribute a 1-to-1 matching investment, which may include cash or in-kind contributions such as employee wages and fringe benefits for time spent in training. Training activities should be strategically planned and aimed at upskilling or reskilling employees to address evolving business requirements.
The Express Program
The Express Program addresses more immediate or smaller-scale training needs by offering expedited access to funding through a simplified application process. Eligible businesses with more than 100 employees may receive a 50% rebate on training expenses, while those with fewer than 100 employees qualify for a 100% rebate, up to an annual maximum of $30,000. Each rebate is limited to $3,000 per employee per course.
There is no mandatory waiting period between grants, enabling businesses to obtain timely support for emerging training priorities.
Eligibility
Any Massachusetts-based employer is eligible to apply for WTFP grants, regardless of company size or industry. Applications are accepted on a rolling basis throughout the year.
Massachusetts Life Sciences Center Tax Incentive Program
The MLSC Tax Incentive program enables MA businesses to create new, long-term jobs in the life sciences sector. The incentive program is designed to attract companies and encourage them to expand their operations by offering tax credits for a range of efforts focused on job creation, capital investment, and R&D.
Available Incentives
The MLSC Tax Incentive program offers nine distinct tax incentives, several of which are refundable:
- Life Sciences Investment Tax Credit: Credit equal to 10% of qualified investments in life sciences property.
- Food and Drug Administration (FDA) User Fees Credit: Credit for certain FDA user fees paid for drug or device approvals.
- Extension of Net Operating Losses: Extends the carryforward period from five to 15 years.
- Refund of Excess Section 38M Research Credits: Refund of up to 90% of unused R&D tax credits.
- Section 38W Life Sciences Research Credit: Credit for qualified research expenses tied to life sciences activities.
- Deduction for Qualified Orphan Drug Expenses: Deduction for clinical testing expenses related to orphan drugs.
- R&D Company Sales Tax Designation: Exemption from sales tax on certain purchases.
- Sales Tax Exemption for Certain Property: Exemption for purchases of tangible personal property used directly in life sciences, R&D, and manufacturing.
- Life Sciences Jobs Incentive Credit: Credit based on the number of net new jobs created (must create 50 or more new jobs).
Eligibility and Process
Applicants must be certified by the MLSC Tax Incentive program and apply during published windows. To qualify, a company must:
- Be engaged in life sciences as defined in Massachusetts General Laws Chapter 23I, Section 2 (e.g., biotechnology, diagnostics, medical devices, artificial intelligence in life sciences).
- Be registered to do business in Massachusetts.
- File a Massachusetts tax return for the applicable year.
- Employ at least 10 permanent Massachusetts full-time employees (35 or more hours per week) as of December 31, 2024.
- Commit to hiring net new full-time employees in calendar year 2025 and retain them through December 31, 2027.
Minimum Job Creation Commitments
- Five net new full-time employees if the company has fewer than 50 Massachusetts full-time employees.
- Located in a Gateway Municipality, or is located in Barnstable, Berkshire, Bristol, Dukes, Franklin, Hampden, Hampshire, Nantucket, Plymouth or Worcester Counties.
- 10 net new full-time employees for all other companies.
Summary of Refundable and Conditionally Refundable Credits
| Program / Credit |
Refundable? | Typical Value |
Key Eligibility / Commitments | Carryforward / Refund Rule |
Offset / Caps |
| Economic Development Incentive Program Credit (EDIPC) | Conditional | Up to $5,000 per new job | New jobs, retained jobs, private investment | 10 years (excess); Indefinite (50% rule) | Offset up to 50% of corporate excise |
| Massachusetts Life Science Center (MLSC) Incentive Program | Portions Refundable | Award-based | Hire ≥5 new FTEs in year 1; retain for 4 years | Program credit specific | N/A |
| MLSC – Life Sciences Jobs Incentive Credit | Yes | Award-based | Hire ≥50 new FTEs in year 1; retain for 4 years | Refundable per award terms | N/A |
| MLSC – Life Sciences Investment Tax Credit | Yes | Award-based | Qualified investments in R&D | Refundable per award terms | N/A |
| MLSC – FDA User Fees Credit | Yes | Award-based | Qualifying FDA fee spend | Refundable per award terms | N/A |
| MLSC – Refund of Excess §38M Research Credits | Yes (90%) | Award-based | MLSC-certified; preexisting unutilized §38M Research Credits | Refund only | N/A |
MA Business Incentives Planning Checklist and Practical Tips
- For the R&D Credit:
- Model both R&D methods annually (Regular vs. Alternative Simplified).
- Track Massachusetts-site qualified research expenses separately from federal totals.
- For the EDIP:
- Start early with the Massachusetts Office of Business Development and your municipality.Many projects layer state credits with local Tax Increment Financing.
- Expect Economic Assistance Coordinating Council diligence on job quality, timing, and sector alignment.
- For WTFP:
- Assess workforce skill gaps, align training goals with business needs, choose qualified providers, prepare detailed documentation, and establish systems for tracking and compliance.
- For MLSC Awards:
- Start early to maintain good standing with the Department of Revenue and the Secretary of State. Review prior year returns and tax items for allocable credit opportunities.
- To Coordinate Incentives:
- Some awards interact or cap utilization against the corporate excise. Build a multi-year utilization schedule that addresses carryforwards and refundability.
Your Guide Forward
Cherry Bekaert's State Credits & Incentives team is dedicated to assisting businesses in Massachusetts with navigating the various credits and incentives available. Whether it's R&D, job creation, workforce training, or life sciences, we're here to support you every step of the way. If you have any questions, please don't hesitate to reach out.
