Research and Development Tax Credit FOR EMPLOYERS

OFFSET YOUR TAX LIABILITY

with the day to day activities of your business.

The R&D Tax Credit is a government incentive worth $18 billion, available to businesses engaged in the creation or enhancement of products or processes as part of their operations.

Receive Free Evaluation

Research and Development Tax Credit FOR EMPLOYERS

OFFSET YOUR TAX LIABILITY

with the day to day activities of your business.

The R&D Tax Credit is a government incentive worth $18 billion, available to businesses engaged in the creation or enhancement of products or processes as part of their operations.

Receive Free Evaluation

Discover the Financial Rewards Hidden within Your Company's Innovation

The Research and Development (R&D) Tax Credit is a $18B government program that incentivizes businesses to invest in innovation and technology advancement. By rewarding companies for conducting research and development activities, the credit encourages continuous improvement and fosters a culture of innovation within the organization. Despite originally only applying to a few highly technical companies, the R&D Tax Credit was made permanent by the PATH ACT of 2015 and the definition of the credit expanded, allowing a wider range of businesses and industries to qualify for this significant valuable federal tax credit. The Federal R&D tax credit is available to US employers that develop or improve new products, processes, software, formulas, or business components. Additionally, over 30 states offer R&D credits to offset state tax liability.


$250,000

POTENTIAL SAVINGS

Per Year, Annually

$14.8 BIllion

 IN R&D CREDITS

Collected Annually By Businesses

42%

oF R&D Credits

Collected by Businesses with less than $5 Million in Revenue

What is the Research and Development Tax Credit?

The R&D tax credit serves as a strategic incentive designed to stimulate research and development activities within the United States. Solidified into permanence by the Protecting Americans from Tax Hikes (PATH) Act of 2015, this tax credit has broadened its reach to include startup companies, amplifying its benefits across the various organizations. It empowers businesses, regardless of their size, to diminish their federal income tax obligations through deductions related to qualified research expenses. These expenditures must pertain to activities that meet specific criteria for innovation and development, ensuring that businesses invest in pioneering projects that drive technological advancement and economic growth.

Industries Well-Aligned For R&D Credit

Many organizations are unaware that their business activities may qualify for the R&D tax credit, leading them to miss out on valuable opportunities for tax savings. Since the expansion of the credit in 2015, the R&D tax credit has become accessible to a wide range of industries, providing an avenue for businesses across various sectors to benefit from this lucrative incentive.

Some industries that are well-aligned for state & federal R&D tax credits are:

  • Financial Services
  • Food & Beverage
  • Game Development
  • Metal Fabrication
  • Mortgage & Banking
  • Oil and Gas
  • Pharma
  • Plastics/Injection Molding
  • Software Development
  • Tool & Die


R&D Tax Credit:

The Four Part Test

Navigating the qualification process for the R&D Tax Credit involves understanding the intricacies of the Internal Revenue Service’s four-part test. This test serves as a guideline to determine whether your engineering activities qualify for this valuable tax credit.

Learn More about the Four-Part Test

How does the R&D credit benefit my business?

The R&D tax credit offers significant benefits to businesses across various industries. By engaging in qualifying R&D activities, businesses can access valuable tax credits that directly impact their bottom line. 

The R&D tax credit allows businesses to offset a portion of their federal tax liability, effectively reducing their tax burden. This can result in substantial cost savings, providing additional funds that can be reinvested into research, development, and growth initiatives.

Use Against Income Tax

You can match the credit against income tax dollar for dollar.

No Limit on How Much  You Can Claim

Help your business grow with no limits on how much you claim.

Carries Forward for Future Growth

The tax credit carries forward for 20 years and you receive money every year you are eligible. 

Case Study

Manufacturing Client Receives $416,000 in Tax Credits

The Research and Development tax credit study yielded Qualifying Research Expenses totaling $4,300,000, and a Research and Development Tax Credit of $416,000.

Frequently Asked Questions about the R&D Credit

  • What is the Four Part Test?

    The R&D (Research and Development) Tax Credit 4-Part Test is a set of criteria used by the United States Internal Revenue Service (IRS) to determine whether a company's activities qualify for the R&D tax credit, a valuable tax incentive intended to encourage innovation and technical advancement. To qualify for the credit, a company's research activities must pass all four parts of this test:


    1. Permitted Purpose Test: The activity must aim to create or improve a product or process in terms of its performance, functionality, reliability, or quality. This includes the development of new software, processes, formulas, inventions, and techniques.
    2. Technical Uncertainty Test: At the outset of the project, there must be uncertainty regarding the capability, method, or the appropriate design of the desired product or process. This means that the company must encounter challenges that cannot be solved without experimentation or further research.
    3. Process of Experimentation Test: The company must engage in a process of experimentation to eliminate the technical uncertainties. This involves evaluating one or more alternatives through modeling, simulation, systematic trial and error, or other methods to achieve the project's objectives.
    4. Technological in Nature Test: The research must fundamentally rely on principles of physical or biological science, engineering, or computer science. This criterion ensures that the work is rooted in hard science and technology, rather than relying on social sciences, arts, or humanities.

    Click here to learn more about the four part test for the R&D tax credit.

  • What states offer R&D tax credits?
    • Arizona
    • Arkansas
    • California
    • Colorado
    • Connecticut
    • Delaware
    • Florida
    • Georgia
    • Hawaii
    • Idaho
    • Illinois
    • Indiana
    • Iowa
    • Kansas
    • Kentucky
    • Louisiana
    • Maine
    • Maryland
    • Massachusetts
    • Minnesota
    • Missouri
    • Nebraska
    • New Hampshire
    • New Jersey
    • New Mexico
    • New York
    • North Dakota
    • Ohio
    • Pennsylvania
    • Rhode Island
    • South Carolina
    • Texas
    • Utah
    • Vermont
    • Virginia

  • What activities qualify for R&D tax credit?

    Qualifying R&D expenses and/or activities are those which pass this four-part test:‍‍


    Technical uncertainty. 

    The activity is performed to eliminate technical uncertainty about the development or improvement of a product or process, which includes computer software, techniques, formulas, and inventions.‍‍


    Process of experimentation.

    The activities include some process of experimentation undertaken to eliminate or resolve a technical uncertainty. This process involves an evaluation of alternative solutions or approaches and is performed through modeling, simulation, systematic trial and error, or other methods.‍‍


    Technological in nature.

    The process of experimentation relies on the hard sciences, such as engineering, physics, chemistry, biology, or computer science.‍‍


    Qualified purpose.

    The purpose of the activity must be to create a new or improved product or process, including computer software, that results in increased performance, function, reliability, or quality.

  • How large will my R&D tax credit be?

    Unlimited, if applying the R&D credit against income taxes. These credits can range between 5% and 15% of qualifying R&D costs. If taking the PATH Act R&D credit, a company can receive up to $250k against payroll taxes and take the remainder against income taxes.

  • Will claiming the R&D credit result in an audit?

    The rate of audits among R&D clients is no larger than the rate of clients whose income tax returns are audited. Be proactive about audit readiness while maximizing your credit value by working with an R&D credit expert.


The innovations your company is working on may be eligible for lucrative tax credits. 

Complete the form below & receive a free R&D Eligibility Assessment from the experts.

Receive a Free R&D
Eligibility Assessment

R&D Tax Credit

If your company is creating new products, or improving existing products or processes, there is a strong likelihood your business may be eligible for the R&D Tax Credit.


In addition to the federal credit, many states offer tax incentives for companies pursuing innovation within their industry. Pre-revenue companies and start-ups with less than five years of revenue can use the federal R&D tax credits to offset future payroll taxes.


Growthlogics' team of credit experts, CPAs, and tax lawyers can help your business explore your Research & Development eligibility.

Led by Tax Attorneys, CPAs & Credit Experts

Our leadership has over 150 years of combined tax experience. With $3 billion in incentives captured, you are in good hands with GrowthLogics.


Quality Guaranteed

Growthlogics provides clients with a comprehensive credit packet, detailing your business's eligibility, qualifications, and calculated credits.

Maximum Credit Yield

When you work with Growthlogics, all tax credit and incentive opportunities are explored with a comprehensive business analysis, uncovering full eligibility potential.