Medical Device Tax Credit

Learn about a medical device credit that is equal to 100% of the user fees paid.

Overview

The medical device tax credit may be available to a qualifying medical device company taxable under the personal income tax or corporate excise. The credit is for tax years beginning on or after January 1, 2006.

The credit is equal to 100% of the user fees actually paid by the medical device company to the United States Food and Drug Administration (FDA).

To qualify, the user fees must be paid during the tax year for which the tax is due for pre-market submissions to market new technologies, developed or manufactured in Massachusetts.

Examples of pre-market submissions include:

  • Applications
  • Supplements
  • Reports
  • 510(k) submissions.

Eligibility

To receive the credit, a medical device company must:

  • File a completed application with DOR
  • Get a credit certificate from DOR
  • Qualify as a “medical device company” that develops or manufactures a “medical device” and
  • Actually pay “user fees”.

For definitions of these terms under Massachusetts law, please see DOR Technical Information Release 06-22.

Carryover and Transfer

The credit may not be carried forward to subsequent tax years.

The purchasing company may carry over the credit but must use the transferred credit within 5 years of the issuance of the certificate. After 5 years, the credit will expire. The purchasing company may not transfer the credit.

Any unused medical device credits may be transferred to a purchasing company in exchange for private financial assistance to be provided by such company. No credits may be transferred unless:

  • The purchasing company provides financial assistance in an amount at least equal to 75% of the medical device tax credit amounts eligible for transfer and
  • The financial assistance is used to fund certain qualifying expenses incurred in connection with the operation of the medical device company in Massachusetts.

A medical device company wishing to transfer unused credits must:

  • File a completed application with supporting documents to DOR
  • Receive a form reflecting the amount transferred and a certificate number.

This certificate must be attached to each tax return filed by a purchasing company in which a medical device tax credit is claimed. The medical device tax credit may not reduce the purchasing company’s corporate excise due below $456.

To transfer unused credits, a medical device company must:

  • File a completed application with supporting documents to DOR
  • Receive a form reflecting the amount transferred and a certificate number.
    • This certificate must be attached to each tax return filed by a purchasing company in which a medical device tax credit is claimed.

Additional information

For more information and important definitions, please see:

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