Metal Fabrication Companies Can Claim R&D Tax Credits

Even the material expenses associated with tooling and die casting might be considered an R&D investment.

When it comes to the R&D tax credit, the metalworking business, like other manufacturing industries, is among the most eligible sectors. While there are a number of metal fabricators who may not consider their daily activities to be research and development, the tax way of defining research and development is expansive and usually includes routine activities. The development or enhancement of manufacturing processes, along with the design and manufacture of customized tooling, castings, jigs, dies, or other production equipment may be eligible for the R&D tax credit under certain conditions. Wages related to the time spent conducting these operations, as well as the materials used to prototype and manufacture bespoke tooling, are eligible for reimbursement. Even the material expenses associated with tooling and die casting might be considered an R&D investment.

Eligible Metal Fabrication-Related Research and Development

Creating preliminary designs during the feasibility analysis of the project
Forming, cutting, and joining operations are all being improved via experimentation
Manufacturing methods are developed to obtain the desired end part design
Process design for casting, folding, forging, extrusion, machining, punching, shearing, stamping, and welding
Program development for automated manufacturing equipment, such as CNC machining centers.
Conducting experiments to decrease waste and production time
Development of novel surface treatment procedures to improve the performance, dependability, or quality of components.
Validation tests to establish the final design of components and tools
Improving overall part quality by doing experimentation on secondary operations
Strip layouts are developed during feasibility and quoting
3D models are developed and conducted experimentation through simulation
Increased material use through adjustments to machining die casting, and extrusion processes
Geometric optimization to reduce the amount of tooling required
Design and development of software models to assess material movement throughout the forming process.
Prototypes and initial items are produced for purpose of validation
Case Study

Case Study on the Use of R&D Tax Credits in Metal Fabrication

After 40 years in the metal fabrication industry, this business strives to innovate metal fatigue and failure mitigation techniques that are used in the aerospace, automotive, biomedical, chemical, defense, energy, and fitness industries as well as the nuclear and oil & gas, as well as the rail industry.

Qualification for R&D Tax Credits

in the Metal Fabrication Industry

While the business did engage in product design on occasion, the majority of its research and development was focused on the creation of production methods. It was determined that the company's research activities fell into three separate categories: stamping, molding, and tooling.

Process design necessitated substantial research and development, which began with an analysis of the component specifications and progressed to an evaluation of the different metal production technologies available. There were engineers on the team as well as technicians, prototype assemblers, testers, and quality assurance personnel. They addressed difficulties relating to shape, fit, material, and performance. Calculations, as well as computer models, were assessed and adjusted as a result of this process. Concerns were raised about issues like configuration, material composition, and manufacturability, among others. Typically, the business created four to five distinct prototypes for testing and evaluation. From the information gathered in the prototype building phase, adjustments would be made to the tooling, fabrication process, or even the product design. For example, prototypes may be created to assess alternative component configurations as well as their resilience to external conditions such as vibration or high temperatures. Several prototypes or samples were frequently built and tested to examine different designs and process applications.

Engineering and prototype assembly teams worked together to create the prototypes that were ultimately used in the production of the final product. Design criteria were sent to prototype assemblers, who were then in charge of producing and constructing prototypes according to those needs. Materials that are primarily utilized in the process of building a prototype include various metals, circuit boards, PC boards, transistors, circuits, wires, and plastic. Secondary materials include other types of polymers. The cost of these supplies was frequently deducted as qualified research and development expenses.

Following that, the prototype designs were put through their paces and validated against the product requirements that were anticipated. Design testing was frequently unsuccessful, necessitating the need for the design to be revised at the component or prototype level, as needed. Testing criteria were addressed by design and process changes during the course of this procedure, which was a continuous cycle between design and assessment. Prototypes may be submitted to environmental testing, which will typically involve vibration and temperature tests. Additionally, acceptability testing was carried out once all other tests had been completed successfully.

Custom fixtures die castings, and tooling was created by the team to bring the product into full production. Also required for the production of prototypes and samples was a set of these. It would also be necessary to establish a repeatable testing and quality control procedure that could grow in response to changes in production volumes. The production component approval procedure (PPAP) was the final stage to complete before the commencement of manufacturing.

Results Speak for Themselves

One firm is receiving more than $130,000 in yearly R&D tax credit advantages from the federal and state governments.

Collect approximately


In combining federal and state tax credits

Estimate your tax credit.

See how much you qualify to receive from the IRS.

Your projected credit is

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Hire US-based engineers, developers, or scientists.
Designs and develops product prototypes and/or software.
Performs experimentation and validation on products, manufacturing processes, and/or software.
None of the above.

This calculator has been developed utilizing data from a variety of studies conducted in the industries listed. This is only an approximation based on a variety of assumptions and should be treated as such.

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