The R&D tax credit is available to taxpayers who incur incremental expenses for Qualified Research Activities (QRAs) conducted within the United States.
.jpg)
While primarily a wage-based credit, it allows companies to reduce tax liability by claiming qualified research expenses. Many businesses are unaware they qualify for the credit, even when performing everyday activities such as improving products, processes, or systems.
Proven Experience, Measurable Impact
The R&D tax credit is primarily a wage-based federal credit, typically worth approximately 7–9% of qualified R&D activities. A taxpayer with $1M of qualified wages could receive a significant tax benefit. Many states also offer R&D tax credits that further enhance the overall value.
The types of businesses that can benefit from an R&D study are far more expansive than most expect. Industries include Aerospace, Electronics, Architecture & Engineering, Food Science, Agriculture, Manufacturing, Automotive, Pharmaceuticals, Biotechnology, Software Development, Chemicals, Telecommunications, and more.
.jpg)
The R&D tax credit has been expanded to allow a larger number of taxpayers to take advantage of the incentive, including businesses that may not have qualified in the past.
Small businesses can now apply the R&D tax credit against alternative minimum tax (AMT). This change has removed a major barrier and allows more companies to utilize the credit effectively.
Startup businesses with gross receipts under $5 million can apply the R&D tax credit against payroll taxes, effectively turning the credit into a near-cash benefit for up to five years.
The R&D tax credit is primarily a wage-based credit, comprised of the following
Qualified Research Expenses (QREs):
Internal wages paid to employees for qualified services; this includes those individuals directly performing the science as well as those individuals directly supporting and supervising these individuals.
Supplies used and consumed in the R&D process.
Third-party contract expenses when someone other than an employee performs a Qualified Research Activity on behalf of the taxpayer.
Basic research payments made to qualified educational institutions and scientific research organizations.
We analyze your business to uncover qualifying research activities.
We estimate financial outcomes and validate eligibility.
We execute alongside your CPA and advisory team.
We refine strategies as your business evolves.
.jpg)
The R&D tax credit provides a powerful opportunity to recover costs associated with innovation. When properly identified and documented, these credits can significantly improve cash flow and support continued business growth.
Get a consultation