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        Minnesota is a state fueled by its large innovative manufacturing industry. Manufacturing software, medical devices, and other key industries in the state conduct research activities that typically qualify for R&D tax credits.

Minnesota R&D Tax Credit

        Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
  •     New or improved products, processes, or software
  •     Technological in nature  
  •     Elimination of uncertainty
  •     Process of experimentation
        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On January 2, 2013, President Obama signed the bill extending the R&D Tax Credit for 2012 and 2013 tax years.  The consensus is that it will most likely either be extended or made permanent. Minnesota also has a Research Activities Credit which is equal to 10% of the first $2 million of the excess of the Qualified Research Expenditures over the base amount, and 2.5% on all such excess expenses over $2 million.

Minnesota Manufacturing

        Minnesota's manufacturing industry is one of Minnesota's key industries. It supports more than 292,000 jobs with an average annual wage of over $56,000 per employee.   Manufacturing contributes $37 billion to the state economy and represents 15 percent of the Minnesota’s gross domestic product. The largest numbers of people are employed in food manufacturing, computers and electronics, fabricated metal, machinery, and printing.     

        Medical device businesses and renewable energy businesses are notable innovation businesses within Minnesota's manufacturing industry. These companies are innovation drivers in the state, with medical device companies generating a large share of patents between 2007 and 2011.

University of Minnesota

        The University of Minnesota is a key driver in innovation within the state. It has a proposed FY14 research budget of $600 million, representing 16.5% of its total budget. Many of University of Minnesota's innovations have been licensed by companies operating within the state - particularly Honeywell, Medtronic and 3M.

Minnesota Incubators and Accelerators

        Minnesota maintains an Office for Technology Communication (OTC) for the purpose of connecting entrepreneurs to innovations for evaluation as commercial viability, as well as finding if the technology is new enough to file a patent or an intellectual property disclosure. The OTC also runs its own incubator.

        The University of Minnesota's Minnesota Innovation Partnerships exists to transform discoveries into innovative solutions and was designed to improve access to University-developed technology while reducing risks and costs associated with licensing university Intellectual property and sponsoring research.

The program has garnered positive response, including praise from CEO Dennis Sellke of International Cardio Corp:

"International Cardio Corporation has been collaborating with the University of Minnesota for over three years and it is great to see these MN-IP program actions to be even more open for business. Published pricing and Minnesota discounts should lead to quicker transactions to the benefit of the university and their commercial partners.”

Minnesota also has University Enterprise Laboratories, Inc. (UEL) - which is a collaborative research center offering lab and office space to early-stage bioscience and biotechnology companies.  One example of a successful company coming out of UEL is current tenant Cima NanoTech in St. Paul, who make transparent conductive nanoparticle films and materials for many types of electronics.   Cima NanoTech's work have produced both thin and flexible and super-thick glass displays that are also touch-enabled for user inputs and resistant to the elements.

The Mayo Clinic Center for Innovation

        The Mayo Clinic Center for Innovation works to transform the delivery and experience of health care by acceleration innovations through design thinking - using problem solving and creative thinking to evaluate and improve experiences.  The center for innovation has had a large part in formalizing the innovation process and focusing innovations on serving patients. The center does this through several projects such as Project RED, which innovates new ways to deliver dialysis to patients; Exergaming, which helps the elderly exercise through games; eConsults, which help people get consultations over distance; and telemedicine, which also helps people receive healthcare over distance. The center also has several external partners including MIT, Microsoft, IBM, Purdue University and Cisco.


        Fueled by innovations grown in its universities and accelerated by its incubators, companies operating in Minnesota have access to innovations necessary to carry out research activities and may qualify for R&D tax credits.

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