R&D Tax Credit Analysis and Guidance

Odds are you’ve heard about it, wondered if your company could take advantage of it, and worried that your competitors are already benefitting from it: the research and development (R&D) tax credit. A tax incentive offered by the federal government and some states to promote innovation, it allows businesses to receive tax credits for expenses incurred for research and development to create a new product, advance product design, or improve production processes. The result is a lowered tax obligation, which translates to increased profit.


Many businesses perform activities that qualify without realizing it. Companies that design, develop, or improve products, processes, techniques, formulas, inventions or software may be eligible for federal and state R&D tax credits. In fact, if your company has simply invested time, money and resources toward the advancement and improvement of its products and processes, your activities may qualify.

Some examples of industries that often qualify for the R&D tax credit include, but are not limited to:

  • Manufacturing
  • Information Technology
  • Engineering
  • Architecture
  • Telecommunications
  • Aerospace
  • Software Development
  • Tool & Die
  • Energy
  • Pharmaceutical

The results of an R&D study can help your bottom line with:

  • Substantial tax deductions
  • Increased cash flow
  • Evidence to potential buyers or investors that you have an attractive and valuable technology

Private businesses in particular should note the added value that the R&D tax credit can offer during mergers and acquisitions. The credits can be claimed in one year and taken in another, making it possible to transfer them to a buyer. They also offer validation of a company’s ability to innovate. Some companies claim the R&D credit annually for the specific purpose of enticing an M&A opportunity.

If your company develops software for use in your business, you should be aware of regulations issued by the Treasury Department. New rules make it easier to claim the R&D tax credit.

Learn more about what expenses qualify for the credit.

Want to know if your business is eligible for this tax credit? Consider an R&D study.

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Tax Team