What Are R&D Tax Credits?

The Research & Development Tax Credit is a government incentive designed to encourage businesses to invest in innovation, improvement, and technological advancement. Originally established in the U.S. in 1981, this credit has been expanded and made permanent to support businesses of all sizes.

Companies that invest in developing new products, processes, or software—or improving existing ones—may qualify for this valuable tax credit.

Key Benefits to Your Business

Substantial Tax Savings

• Reduce your federal and state tax liability

• In some cases, receive cash refunds or carryforward credits

• Startups can offset payroll taxes with R&D credits

Boost Innovation Funding

• Free up capital to reinvest in research, talent, and technology

• Improve ROI on internal development and experimentation

Available to All Business Sizes

• Not just for large corporations—startups and small businesses can also benefit

• Many industries qualify beyond traditional "tech" or "science"

Retroactive Credits

• Eligible businesses can often claim credits for prior tax years (typically up to 3 years)

Who Qualifies?

You may be eligible if your business is involved in:

• Developing new or improved products or processes

• Designing prototypes or models

• Writing or improving software

• Engineering, testing, or experimentation

• Solving technical problems or uncertainties

Industries that commonly qualify:

• Software & Technology

• Manufacturing

• Engineering

• Construction

• Life Sciences

• Aerospace

• Food & Beverage

• Agriculture

What Activities Qualify?

To claim R&D tax credits, your activities must meet the following four-part IRS test:

1. Permitted Purpose
   Work must aim to improve function, performance, reliability, or quality.

2. Technological in Nature
   Activities must be based on hard sciences like engineering, computer science, or physics.

3. Elimination of Uncertainty
   You must be trying to resolve technical challenges or unknowns.

4. Process of Experimentation
   Your development process must involve testing, modeling, simulation, or trial-and-error.

What Expenses Can Be Claimed?

You can claim credits based on qualifying expenses, such as:

• Wages of employees involved in R&D

• Supplies used during experimentation or prototyping

• Contract research costs (up to 65% of the cost)

• Cloud computing and hosting related to software development

Documentation Required

Maintaining detailed records is critical. Recommended documentation includes:

• Project plans and design documents

• Timesheets and payroll records

• Expense reports and invoices

• Prototypes or testing documentation

Why Work With an R&D Credit Specialist?

Navigating the rules and maximizing your credit takes expertise. We help you:

• Identify all qualifying activities and expenses

• Prepare audit-ready documentation

• File amended tax returns, if needed

• Coordinate with your CPA or tax advisor

Our team ensures you receive the maximum benefit without the risk of non-compliance.

Start Unlocking Your R&D Tax Credits Today

Don’t leave money on the table. If your business innovates, improves, or builds, you may be eligible for substantial tax savings.