R&D Tax Credit
R&D tax credits can help you capture valuable savings for your business.
If you’re developing a new or improved product or process, creating software, engaging in engineering, architecture, scientific or technical services, you may qualify for the Federal Research Credit (also known as the R&D tax credit).
Kaufman Rossin’s R&D tax credit experts can analyze your organization’s research and development operations to determine if you are eligible for this business credit.
What is the R&D tax credit?
First enacted by Congress in 1981, the Credit for Increasing Research Activities, commonly known as the R&D tax credit or research tax credit, is a federal tax incentive for businesses to increase their investments in research and development. Under Section 41 of the Internal Revenue Code, the credit allows qualifying taxpayers to reduce their tax liability based on their annual Qualified Research Expenses (QREs). QREs include certain expenses paid or incurred while conducting Qualified Research Activities (QRAs).
The federal R&D tax credit is a dollar-for-dollar offset of an income tax liability that is generally claimed by businesses developing or improving products, processes or software.
The credit often represents 7% to 10% of R&D expenditures.
Who can benefit from R&D tax credits?
Companies in a wide range of industries, from healthcare to financial services, can potentially qualify. Industries in which the R&D Tax Credit is frequently captured include, but are not limited to, the following:
- Aerospace
- Agriculture
- Architecture & Engineering
- Biotechnology
- Financial services (for IT-oriented projects)
- Fintech
- Food & Beverage
- Manufacturing
- Medical device development/manufacturing
- Pharmaceuticals
- Software development
- Technology
- Video game development
- Other service providers that perform IT-oriented research and development
Projects you might not associate with R&D can be eligible for the credit, which is available for more than just lab research and new product development.
How the R&D tax credit could benefit your business
Download our R&D white paper to learn:
- The value of the tax benefit
- Which types of industries, companies and activities may qualify
- Requirements for qualifying
- How and when companies can use the credit
- How the credit is calculated and substantiated
- Examples of eligible projects
- How to get started
What may qualify as research and development?
Various activities may qualify as research and development in a wide range of industries, including but not limited to the following:
- Development of e-commerce solutions
- Developing new tangible goods, products, processes or software
- Developing proofs-of-concept and prototypes
- Improving the performance or quality of an existing product, software or manufacturing process
- Adding functionalities to or improving the scalability of an existing software
- Developing new drugs and therapies
- Experimenting with alternative or new raw materials
- Conducting experimental and clinical trials
Identifying and substantiating all eligible costs can be complex and burdensome.
Kaufman Rossin’s dedicated team of engineers and R&D tax specialists can help you optimize the credits you’re entitled to. Our experienced team uses proven processes to gather the documentation directly from the source.
We provide:
- Robust, proactive and adaptive methodology
- Thorough analysis of typical and non-obvious costs
- In depth understanding of R&D tax credits across jurisdictions
- Streamlined substantiation process through analyses of your existing data points
