Tax Credits and Incentives | R&D Tax Credits

R&D tax credits

Reduce your tax burden, free capital and fuel more innovation.

tax credits

Tax benefits

Many businesses are unaware of the full tax benefits available through federal and state research credits. These credits reduce company and owner tax liability dollar-for-dollar. They also incentivize innovation across industries by supporting the development of new products and processes. Manufacturing and construction firms are especially well-suited, as competitive pressures demand constant improvements in efficiency and quality. For these businesses, research is often essential for survival, making the R&D tax credit a valuable bonus that rewards their investment in innovation.

The R&D tax credit process

Identify qualified research activities

To qualify for the research credit, activities must meet four criteria: a permitted purpose, technological in nature, involve a process of experimentation and aim to eliminate uncertainty.

Capture all qualified research expenses

Qualified research expenses include in‑house costs such as salaries and wages for research staff, supervisors, and clerical support; supplies used in research; and 65% of payments for outside contract research. Expenses for foreign research, or research in the social sciences, arts, humanities, or funded/subsidized projects do not qualify.

Claim the research credit

The amount of the research credit involves a complicated formula with several limitations.
The research credit, once calculated, is available to both taxable C Corporations and owners of pass-through entities (S Corporations and Partnerships/LLCs).

Document and optimize

The most frequent issue raised in audits is the lack of documentation that the company’s research spending satisfies qualifying tests noted above, as well as support for the various expenditures. Without proper documentation, any claimed credits are potentially jeopardized upon a tax audit.