Get to Know the R&D Tax Credit

Drive your business forward with the R&D Tax Credit

Push Your Business Forward With The R&D Tax Credit

The Research and Development Tax Credit (“R&D Credit”) was enacted in 1981 as part of the Economic Recovery Act. The qualified research is identified by examining qualifying research activities and then subsequently isolating expenditures related to employee wages, outside consulting costs, and certain material expenses.

Get a Direct Reduction on the Taxes Your Business Owes to the IRS

Improve Cash Flow

Taxpayers may claim credits back three years and carry forward unused credits for up to 20 years.

Reduce Your Effective Tax Rate

Utilize the federal R&D tax credit against payroll tax (applicable to certain startup companies).

Minimize Tax Liability

The R&D Credit allows companies, of any size, to claim a dollar-for-dollar reduction in tax liability for conducting qualified research within the United States.


For every dollar identified as ‘qualified’ you can receive an 8-10% tax credit.

Ex. Your business has $1 Million in qualified expenditures, then you qualify for an $80 – $100 K dollar-for-dollar tax credit that can be applied to the taxes your business owes.

Who Qualifies?

When it comes to the tax code, the definition of what may qualify as research and development is extremely broad, and includes any work performed that involves design or development to create a new or improved business component. A business competent can be either a product, process, formula, invention, technique or software. Industries that qualify for the R&D credit are extremely expansive. Below is a non-exhaustive list of qualifying industries:

Breweries & Wineries
Pharmaceuticals / Life Sciences


  • Developing code for new software architecture or algorithms.
  • Adding functional enhancements and new capabilities to existing applications for a competitive advantage.
  • Crafting specialized technologies, such as artificial intelligence or voice recognition applications.
  • Developing new software applications for internal use or to interact with customers or vendors.


  • Attaining LEED certification for environmental leadership.
  • Exploring various design alternatives and evaluating them.
  • Innovating new or improved structural designs.
  • Creating in-house software applications for customer/vendor interactions.
  • Formulating preliminary design and development plans.
  • Employing computer-aided design (CAD) modeling and testing in the early stages.
  • Creating schematic designs.
  • Crafting unique and energy-efficient functional designs.


  • Innovating and devising novel drugs and therapeutics.
  • Creating and advancing new or enhanced medical devices.
  • Improving drug delivery mechanisms for better efficacy.
  • Enhancing testing and analytical methods and procedures.
  • Identifying molecular targets and potential applications.
  • Conducting thorough testing of therapeutic agents.

Breweries & Wineries

  • Developing recipes to achieve desired flavor, texture, and aroma profiles.
  • Creating product formulations, including ready-to-drink or low alcohol by volume (ABV) options.
  • Employing fermentation techniques and utilizing appropriate yeast strains.
  • Designing equipment, such as stills, tanks, crushing, sorting, and bottling systems.
  • Utilizing filtration or straining methodologies during production.
  • Optimizing bottling and packaging processes.
  • Implementing methods to ensure consistency, stability, and extended shelf life.
  • Incorporating sustainable practices into the production process.
  • Utilizing software applications for various aspects of the production and management process.


  • Determining optimal equipment placement and tooling requirements.
  • Enhancing quality assurance testing processes.
  • Complying with stringent regulatory requirements in process development.
  • Creating prototypes using CAD and computer-aided manufacturing.
  • Advancing robotics and automated technologies.
  • Exploring innovative filling and packaging techniques.
  • Enhancing strength, durability, and service life of products.
  • Maximizing feeds/speeds while ensuring part integrity and quality.
  • Improving various processes, including filling, sealing, die design, waste control, recycling, and flexibility to accommodate increased product volume and diversity.

Pharmaceuticals/ Life Sciences

  • Designing new drugs and medical therapeutics.
  • Developing improved medical devices and drug delivery mechanisms.
  • Identifying molecular targets and indications for therapies.
  • Testing and evaluating therapeutic agents.
  • Designing and conducting clinical trials.
  • Investigating drug-drug interactions and relative efficacy.
  • Exploring new indications and patient populations for existing drugs.
  • Developing improved manufacturing processes.
  • Automating processes with technology, AI, or robotics.
  • Creating prototypes.


  • Leveraging Building Information Modeling (BIM).
  • Exploring and developing alternative structural designs.
  • Improving heating, cooling, and ventilation systems.
  • Developing enhanced lighting solutions.
  • Innovating alternative electricity conduction systems.
  • Creating efficient water flow and plumbing systems.
  • Integrating waste disposal processes into structures.
  • Incorporating transportation systems into functional designs.
  • Embracing sustainable design principles.
  • Utilizing CAD modeling for precision and refinement.

How It Works

Phase 1

Getting To Know Your Business

We gather preliminary financial and project information to develop a high-level credit estimate for the selected tax years. If no potential credits are identified, credits are minimal, or it would not make sense to proceed with the credits from a taxpaying position, we terminate our contract at no cost.

Phase 2

Employee & Project Documentation

We work closely with the client to gather detailed employee and project information and documentation. Additionally, we conduct interviews to establish qualifying employee activities and tie those qualifying activities to projects or endeavors the company undertakes. This allows us to refine our high-level estimate and calculate a final tax credit for the company.

Phase 3

Reporting Phase

During this phase, we document a deliverable that substantiates the company’s research and development activities as it relates to all qualifying expenditures. The report includes applicable statutory and regulatory information to ensure that all components of the claimed R&D Credit are accounted for and will withstand IRS scrutiny.

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Is the R&D Tax Credit Permanent?

In December of 2015, Congress passed the PATH Act that made the R&D credit a permanent part of the tax code. This was a big win for small and medium sized businesses. Companies can now forecast and budget accordingly knowing the credit will be available for years to come.

Does the R&D Tax Credit Offset Payroll Taxes?

One of the enhancements to the R&D credit was the ability to offset payroll tax for startup companies. Qualified Small Businesses (less than $5 million in gross receipts and with gross receipts of 5 years or less) can use the R&D Credit to offset employer payroll tax, which is capped at $250,000 for each applicable tax year beginning in tax year 2016. This allows companies who are not profitable, but still conducting R&D activities to take advantage of the credit.

Is there a maximum on the R&D Tax Credit?

There is no maximum ceiling on how much you could claim via this tax credit.

Find Out If You Qualify

Start with a short call with our team to determine your eligibility.