What is the R&D Tax Credit?
A dollar-for-dollar tax credit for businesses that invest in developing or improving products, processes, software, or techniques—even small improvements may qualify.
What industries qualify?
A variety of industries may qualify including, but not limited to: Manufacturing, software, engineering, architecture, bioscience, agriculture, and construction.
Does my industry or business type matter?
No. Any business solving technical challenges through experimentation rooted in the hard sciences such as engineering, computer science, and/or physical/biosciences.
Isn’t the R&D credit only for lab research or groundbreaking inventions?
Not at all. The credit is much broader than traditional lab work. Many companies wrongly assume they don’t qualify and self-censor, overlooking routine activities like process improvements, prototyping, automation, or software enhancements.
Does the R&D need to be new to the world?
You don’t need to invent something new to the world—you only need to attempt to develop something new or improved for your business. If the solution exists elsewhere but wasn’t known to your company, your work may still qualify. Success or failure of the research doesn’t matter.
What types of costs can I include?
Qualified expenses often include employee wages, materials used in testing or prototyping, contract research fees, and cloud hosting tied directly to development.
How much could I get back?
Businesses typically recover 6%–10% of qualifying R&D costs at the federal level, plus possible additional state credits.
Can this help if I’m not profitable and don’t pay income tax yet?
Yes. Startups and small businesses can use up to $500,000/year of credits to offset payroll taxes—even if no income tax is owed.
Missed claiming it in prior years?
You can amend prior tax returns—usually up to the last three years—to capture unclaimed credits and potentially secure refunds.
How do I claim the credit?
File IRS Form 6765 with your income tax return. If you’re a small business electing payroll credits, there’s a special section for that.
What if I can’t use all my credit this year?
Unused credits can usually be carried back one year and carried forward up to 20 years—you don’t lose the benefit.