The California entry, field by field
This is the registry entry our engine applies for tax year 2026, rendered field by field. Where a field is blank in the registry, the row says so rather than filling the gap.
Program flags on this entry
- Contract research in state
- Yes
- Wages in state
- Yes
- CA ASC available
- Yes
- Business credit cap $5M through 2026
- Yes
- Credit for TY2026
- Current credit Yes. Our rules registry carries a current California research credit for tax year 2026.
- Structure
- Incremental: the credit applies to qualified research expenses above a state base amount
- Credit rate
- 15% of qualified research expenses above the base amount
- Additional statutory component
- 24% of basic research payments Cal. Rev. & Tax Code §23609 adds 24% of basic research payments to the 15% on qualified research expenses above the base amount. It is a separate component on a different base, claimed in addition to the 15%, not instead of it. Ricerca does not credit ordinary qualified research expenses at 24%.
- Base method
- The base amount is the federal §41(c) computation with California qualified research expenses and California gross receipts substituted; the state statute adopts that formula and modifies it. The registry does not carry a written description of that formula for this state, so the study establishes it against the statute cited below. The registry carries a base percentage of 50%. That is the statutory minimum base amount (§41(c)(2) as incorporated by the California statute): a floor under the base, and therefore a ceiling on the credit, not the base itself. Where California gross-receipts and fixed-base-percentage history is not on record the engine applies that floor and blocks issuance until the real base is substantiated.
- Utilization cap
- $5,000,000 of credit may be used against tax in the year A usage limit, not a haircut: the excess is not forfeited, it carries forward. It never reduces the computed credit.
- Carryforward
- Indefinite
- Carryback
- None recorded
- Refundable?
- Not determined in our registry - we confirm it in the study The registry treats an unverified "nonrefundable" as unknown rather than asserting it.
- State form
- FTB 3523
- Statute
- Cal. Rev. & Tax Code §23609 (post-SB 711: IRC conformity 1/1/2025; AIRC repealed; CA ASC added; SB 167 $5M credit cap TY2024-26)
How the California credit is computed
The California credit is incremental: it applies to the qualified research expenses that exceed a state base amount, not to the whole year's spending. The registry carries a rate of 15%.
The base amount is the federal §41(c) computation with California qualified research expenses and California gross receipts substituted; the state statute adopts that formula and modifies it. The registry does not carry a written description of that formula for this state, so the study establishes it against the statute cited below. The registry carries a base percentage of 50%. That is the statutory minimum base amount (§41(c)(2) as incorporated by the California statute): a floor under the base, and therefore a ceiling on the credit, not the base itself. Where California gross-receipts and fixed-base-percentage history is not on record the engine applies that floor and blocks issuance until the real base is substantiated.
On limits, a $5,000,000 utilization cap limits what may be applied against tax in the year, with the excess carried forward rather than lost. Unused credit carries forward indefinitely. Refundability: not determined in our registry, so the study confirms it against the statute rather than asserting it here.
Ricerca computes the California figure from the same substantiated expense base as the federal §41 credit, using the registry entry for the tax year claimed and applying the state's own qualification rules to it. Where the registry is silent on a point, the study says so and the position is resolved with the return preparer instead of being assumed.
Claiming it alongside the federal credit
The federal §41 credit comes first. It is computed from the qualified research expenses the study substantiates - wages for qualified services, supplies consumed in research, computer and cloud rental, and the allowable share of contract research - and it lands on Form 6765 with the return.
The California credit is then computed from that same substantiated base, with the state's own rules applied on top: its rate, its base amount, its caps, and its own view of what counts. Where the work was physically performed matters: state credits generally reach the research done in the state, so the same employee can sit inside one state's base and outside another's.
That is why the allocation work is done once, at the expense level, with the state attribution recorded as it is built rather than reverse-engineered at filing time.
One base, two computations
- 1 Qualify the activities under the four-part test and total the year's QREs.
- 2 Compute the federal §41 credit and file it on Form 6765.
- 3 Apply the California entry above to the California share of that base, and file it on FTB 3523.
Sources
The citations below are carried verbatim on the California registry entry. They are what the study cites, and what a reviewer can check.
- Statute
- Cal. Rev. & Tax Code §23609 (post-SB 711: IRC conformity 1/1/2025; AIRC repealed; CA ASC added; SB 167 $5M credit cap TY2024-26)
- Form
- FTB 3523
Registry entry version 2025.1, exported from services/study-api/app/engines/rules_engine.py (STATE_RULES_2024 + STATE_RULES_REGIME_OVERRIDES via RulesEngine.get_state_rules) on September 10, 2026. The registry is versioned per state and per tax year: the entry above governs TY2026, and a study for an earlier year is computed under that year's entry instead.