Research & Development -
R&D Tax Credits
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What Is the R&D Tax Credit?
The R&D tax credit is available to companies developing new or improved business components. It’s available at the federal and state level, with over 35 states offering an additional credit to offset state tax liability. The R&D tax credit is calculated as a percentage of the company’s expenses related to R&D activities. Qualified R&D expenditures can include operating expenses such as wages, materials, and payments to third-party contractors if the activity that gives rise to the expenditure is a qualified research activity. So, while these expenses are generally fully deductible when determining taxable income, what many companies do not realize is that they can also count toward the R&D credit.
Qualifying R&D Activities
Activities that give rise to qualified research expenditures for purposes of the Sec. 41 R&D credit can include such activities as:
Developing a new or improved product
Developing new technology
Creating a new production process
Improving current processes
Developing or improving software
Developing prototypes or models
The R&D Tax Credit Process Is Simple
Don’t overlook the R&D Credit
Any business that is currently improving or creating new or improved products, processes, or technology can potentially take advantage of the R&D credit — one of the most beneficial federal tax credits currently offered. The R&D tax credit is both a federal and state incentive, with roughly 70% of states offering it. Call us at 212-635-9500 to talk to an R&D tax specialist today.
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