Hundreds of Millions
in R&D Tax Credits claimed
The R&D Tax Credit provides companies dollar-for-dollar cash savings for performing activities related to the development, design, or improvement of products, processes, formulas, or software.
What is the Research and
Development (R&D) Tax Credit?
The R&D Tax Credit (26 U.S.C. Code §41) is a federal benefit that provides companies dollar-for-dollar cash savings for performing activities related to the development, design, or improvement of products, processes, formulas, or software. This credit provides much needed cash to hire additional employees, increase R&D,
expand facilities, and more. The credit was enacted in 1981 to stimulate innovation and encourage investment in
development in the US. Since then, many states have also passed the R&D Tax Credit. As such, this benefit is
available across a wide variety of industries.
R&D Tax Credit Benefits by State
*State offering R&D tax credit
*States without R&D tax credit
Estimate Your Benefits Instantly
Use our calculators for an estimate of state and federal benefits or to determine if you can offset
payroll tax using the R&D tax credit. It’s easy to use and free. If at any time you have questions,
contact us. We are here to help you realize your maximum tax benefit.
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What You Stand to Gain
- There are several benefits to realizing the R&D tax credit. These benefits can include the following:
- Receive up to 12-16 cents of federal and state R&D tax credits for every qualified dollar
- Create a dollar-for-dollar reduction in your federal and state income tax liability
- Increase earnings-per-share
- Reduce your effective tax rate
- Improve cash flow
- Carry forward the credit up to 20 years
- Perform look back studies to recognize unclaimed credits for open tax years (generally 3 or 4 years)
- Utilize the federal R&D tax credit against payroll tax (applicable to certain startup companies)
How Qualification Works or Eligibility Criteria Explained
Qualified research activities are defined by the four-part test outlined below
Technological in Nature
Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.
Permitted Purpose
Activities must be performed in an attempt to improve the functionality, performance, reliability, or quality of a new or existing business component.
Eliminate Uncertainty
Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.
Experimentation
All of the activities must include a process of experimentation including testing, modeling, simulating, systematic trial and error.