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- R&D TAX CREDIT
- R&D Tax Credit
A federal and state incentive that rewards companies for investing in
innovation, whether or not the project succeeded.
A federal and state incentive that rewards companies for investing in innovation, whether or not the project succeeded.
- Overview
The Research and Development (R&D) Tax Credit is an incentive offered both federally and by states to reward companies for investing in innovation. The goal of the incentive is to increase R&D activity in the United States. The credit was initially created by the Economic Recovery Act of 1981 and was made permanent in 2015 by the Protecting Americans from Tax Hikes (PATH) Act. Claiming the credit requires a comprehensive, engineering-based study conducted by specialists in the field, with strong supporting documentation essential for a successful claim.
Dollar-for-Dollar Reduction
A dollar-for-dollar reduction of federal and state tax liabilities.
Increased Cash Flow
Credits reduce tax owed, freeing up cash for reinvestment.
Payroll Tax Offset
Certain qualified small businesses can offset payroll tax instead of income tax.
Carryback and Carryforward
The credit can be carried back 1 year and carried forward 20 years, and claimed for open tax years, typically the last 3.
- Manufacturing and fabrication of all kinds
- Engineering, architectural design, and construction
- Software and technology
- Pharmaceutical and research
- Telecommunications, metal fabrication, and chemical
- Oil and gas, tool and die
New or Improved
Activity must be to develop or improve a product, process, software, formula, or technique.
Technological Nature
The process of experimentation must fundamentally rely on principles of physical or biological sciences, engineering, or computer science.
Eliminate Uncertainty
Activity must be intended to discover information to eliminate uncertainty concerning the capability, method, or design for developing or improving a process or product.
Experimentation
Must demonstrate that a process was used which included the evaluation of alternatives to achieving the desired result.
Employee Wages
Wages paid to employees for time spent performing, supervising, or supporting qualified research.
Supplies
Materials and supplies consumed in the course of qualified research.
Contract Research
Amounts paid to outside contractors or 1099 workers to perform qualified research.
Cloud Hosting
Hosting and computing costs for maintaining a qualified development environment.
- Recent Results
- 2025 Tax Year
- Federal + Indiana State
Agricultural research & genetics licensing
$289,837
in R&D tax credits claimed
- 2025 Tax Year
- Federal
Hormonal testing products & diagnostic procedures
$155,924
in R&D tax credits claimed
View 1 more case study
- 2024 Tax Year
- Federal + Indiana State
Trailer manufacturing — equipment haulers, flatbeds, tilt, pipe & utility trailers
$66,000
in R&D tax credits claimed
- Watch & Learn
Quick Video Answer
How is the R&D Tax Credit calculated?
What documentation will we need to provide?
Do we qualify if our project doesn't succeed?
What counts as qualifying research and development activity?
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- FAQs
Answers to some of our most common questions
More than most people expect. An activity can qualify if you’re developing or improving a product, process, formula, or software and facing real technical uncertainty you resolve through experimentation. Manufacturers improving a process, software teams building new features, and engineering firms solving a design problem can all potentially qualify, no dedicated research department required.
Yes. The credit rewards the process of experimentation, not the outcome. If your team tested an approach, evaluated the results, and adjusted, that activity can qualify whether the end product succeeded, failed, or got shelved.
The credit is based on your qualified research expenses, wages, certain supplies, and a portion of contract research costs, run through one of two IRS-defined methods. Which method produces the stronger result depends on your specific numbers and history, so we calculate both and apply whichever gets you the strongest, most defensible result.
Mostly records you already keep: payroll for employees on the qualifying work, project documentation, accounting records, and any contractor invoices. We also conduct technical interviews with your team to fill in what paperwork alone can’t capture.
Curious if R&D Tax Credit applies to you?
A short conversation tells us fast, and it’s free either way.