
Deadline Fast Approaching – Massachusetts Life Sciences Center Tax Incentive Program
- Published
- Jan 30, 2025
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- Annette Fago
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The 16th round of the Massachusetts Life Sciences Center (MLSC) Tax Incentive Program is accepting applications through February 19, 2025. A key component of the Commonwealth’s efforts to foster innovation and economic growth and stay a hotbed for life science activity, the MLSC is offering up to $40 million in tax incentives this round – an increase from $30 million in previous years.
Recent passage of the Mass Leads Act has made the MLSC Tax Incentive Program more attractive by increasing the annual cap for incentives, as mentioned above, and has also done the following:
- Decreased the compliance period from five years to three
- Extended the program through 2033
- Increased the scope of the MLSC to include programs that support preventative medicine and health-related artificial intelligence
- Decreased job creation thresholds from 10 jobs to 5 jobs in certain circumstances
Program Overview
Established as part of the Massachusetts Life Sciences Initiative, the MLSC Tax Incentive Program aims to stimulate the growth of the state’s life sciences ecosystem by offering a variety of tax incentives to applicants that commit to expanding operations, creating jobs, and investing in the Massachusetts economy, including several that may be claimed on the 2024 Corporate Excise Tax return.
Qualification Criteria
To qualify for the MLSC Tax Incentive Program, applicants must meet the following requirements:
Location
Applicants must be registered to do business in Massachusetts, must be filing a Massachusetts tax return for 2024, and must employ at least 10 permanent Massachusetts Full-Time Equivalent Employees (FTEs) as of December 31, 2024.
Job Creation
Applicants must commit to hiring in Massachusetts during the calendar year 2025 and commit to retaining those jobs through December 31, 2027.
Other information:
- Minimum commitment of five net new FTEs if the applicant does at least one of the following:
- Employed less than 50 permanent Massachusetts employees as of December 31, 2024
- Is in a Gateway Municipality
- Is in one of the following counties: Barnstable, Berkshire, Bristol, Dukes, Franklin, Hampden, Hampshire, Nantucket, Plymouth, Worcester
- Minimum commitment of 10 new FTEs for all other applicants
Industry Eligibility
Applicants must be a legally organized, “for-profit” entity engaged in life sciences research, development, manufacturing, or commercialization in the Commonwealth.
Investment Commitment
The applicant must plan significant investments in infrastructure, equipment, or other qualifying activities within the state. While no specific investment thresholds are required, the MLSC Tax Incentive Program encourages substantial investments in property and infrastructure that align with the company’s job creation commitments. In 2024, the MLSC Tax Incentive Program allocated $21.4 million to nineteen companies, which created 1,155 new jobs across the Commonwealth.
Compliance
Applicants must demonstrate good standing with the Massachusetts Department of Revenue and other state agencies.
Incentives
Participants in the MLSC program may qualify for the following tax credits and incentives:
Life Sciences Investment Tax Credit (ITC): Provides a credit equal to 10% of the cost of qualifying property acquired, constructed, or erected during the tax year, used exclusively in Massachusetts. This credit is refundable up to 90% of the balance after offsetting tax liabilities.
Life Sciences FDA User Fees Tax Credit: This credit is equal to 100% of the user fees paid to the U.S. Food and Drug Administration upon submission of an application to manufacture a human drug in Massachusetts. To be eligible, more than 50% of the drug's research and development costs must have been incurred in the state. This credit is refundable up to 90% of the balance after offsetting tax liabilities.
Life Sciences Research Tax Credit: This credit is available for certain qualified research expenditures, including those related to legally mandated clinical trial activities performed both inside and outside of Massachusetts. Unused credits may be carried forward for 15 years; however, this credit is not refundable.
Life Sciences Refundable Jobs Tax Credit: Granted to companies that commit to creating a minimum of 50 net new permanent full-time positions in Massachusetts. The MLSC, in consultation with the Department of Revenue, determines the amount of this credit, which is refundable up to 90% of the balance after offsetting tax liabilities.
Extension of Net Operating Losses (NOL): This policy allows certified life sciences companies to carry forward net operating losses for up to 15 years, providing extended relief compared to the standard 5-year carryforward period.
Deduction for Qualified Orphan Drug Expenses: Permits a deduction for certain clinical testing expenses related to orphan drugs, which are typically not fully deductible under standard tax rules.
Sales and Use Tax Exemptions: These include exemptions for property subject to sales tax that is used directly in research and development by a certified life sciences company.
Designation as a Research and Development Company: Provides certain tax benefits, including sales tax exemptions, to companies designated as research and development entities.
Application Process
To participate in the MLSC Tax Incentive Program, businesses must submit their application no later than February 19, 2025, at 5 pm EST. Applications are submitted online through the MLSC’s portal.
Applications are reviewed by MLSC staff and an external advisory board upon submission. Criteria include the potential economic impact, job creation, and the project’s alignment with the state’s strategic goals for life sciences. Successful applicants are notified and required to enter a performance agreement with MLSC.
If approved to participate in the program, the company will enter into an agreement with the MLSC that outlines specific commitments, such as job creation targets and investment levels, that must be met to maintain eligibility for the tax incentives. Companies must also submit regular reports to the MLSC demonstrating compliance with the terms of the performance agreement.
Upcoming Deadline
The deadline for the current application cycle is fast approaching, and interested companies are encouraged to act promptly. Missing the deadline could mean waiting another year to access these valuable benefits. Complete your application and submit it by the official deadline posted on the MLSC website.
Secure Significant Tax Benefits
The Massachusetts Life Sciences Center Tax Incentive Program is a vital tool for life sciences companies looking to grow and thrive in the Commonwealth. By providing financial incentives and fostering an environment of innovation, the program supports businesses in creating jobs, investing in research, and contributing to the state’s economy.
If you’re ready to secure significant tax benefits and become part of Massachusetts’ life sciences ecosystem, take advantage of this opportunity with Life Sciences, Tax, Accounting & Advisory Services. Contact us to discuss how we can assist.
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