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The R&D Tax Credit,
dollar for dollar.
A federal (and most state) tax credit — not a deduction — for any business that designs, builds, improves, or engineers. Capture up to 3 prior open tax years.
A brief history
Forty-three years of incentive. Now permanent.
The R&D Tax Credit was created by the Economic Recovery Tax Act of 1981 under President Reagan to keep U.S. innovation onshore.
For decades it was a temporary provision — renewed by Congress 16 separate times across multiple administrations.
In December 2015, the PATH Act made the credit permanent, and expanded it to allow small businesses to apply the credit against payroll taxes — a game-changer for pre-revenue startups.
Today it's one of the most under-claimed credits in the code: only ~33% of eligible businesses claim it.
What the credit actually is
A credit, not a deduction — and that distinction is worth millions.
The credit allows businesses to offset their tax liability — dollar-for-dollar — based on qualified research expenses (QREs).
A $100K credit reduces your tax liability by $100K. Not your taxable income — your tax bill directly.
A $100K deduction at a 30% rate saves $30K. A $100K credit saves $100K. The credit is ~3x more valuable.
The federal credit is just the start. Most states layer their own R&D credit on top — California, NY, Massachusetts, Texas, and many more.
The main components
Qualified Research Expenses include:
- Employee wages
for time spent on R&D.
- Supplies
consumed during research.
- Contract research
65% of amounts paid to third parties.
- Cloud computing costs
used for R&D (added in recent years).
Who qualifies
Far more industries qualify than people realize.
The four-part test
Every qualifying activity passes all four.
The activity must be intended to create or improve a product, process, formula, technique, invention, or software — improving functionality, performance, reliability, or quality.
The activity must rely on the principles of a hard science: engineering, computer science, biology, chemistry, or physics.
At the start of the project, there must be technical uncertainty as to the capability, methodology, or appropriate design of the result.
The work must involve a systematic process of evaluating alternatives — modeling, simulation, trial and error, or scientific method.
R&D credit calculator
Plug in your numbers. See the credit instantly.
Our process
Five steps. Audit-ready credit.
- 01Free Preliminary Review
We analyze your activities at no cost and confirm the credit opportunity is real before any engagement.
- 02Technical Activity Review
We interview your engineers, developers, and technical staff to document every qualified project and uncertainty resolved.
- 03QRE Calculation
We calculate qualified research expenses: wages, supplies, contract research (65% rule), and cloud computing.
- 04Credit Delivery
We deliver the federal credit calculation, state credit (where applicable), and form-ready figures to your CPA.
- 05Audit Protection
IRS-ready technical narratives, contemporaneous documentation, and full audit defense — included.
Free technical review. No engagement until we confirm savings.
A 30-minute call with one of our sales leaders — by the end you'll know whether your activities qualify and roughly how much credit is on the table.
Request Free Review