R&D Tax Credit for Chemical Companies

Developing and utilizing pilot plants to evaluate and scale up the manufacturing process may qualify.

Chemical producers engage in a wide variety of activities that are eligible for the R&D tax credit. These operations might vary from product formulation and development to the design as well as the development of large-scale manufacturing facilities. Taxpayers who create a few chemical goods frequently invest large money in product development, safety validation, and regulatory certification. In cases of larger taxpayers, they may be spending higher costs on the design and construction of large-scale manufacturing facilities. Developing and utilizing pilot plants to evaluate and scale up the manufacturing process may qualify. Chemical product safety, stability, and packaging all need major R&D efforts. Consumer chemicals, industrial chemicals, cosmetics, and textiles are only a few of the sub-industries in this sector.

Qualified Research Activities for Chemical Companies

Research and development of novel chemical products
Conceptualization and implementation of innovative packaging solutions
Equipment design and development for laboratories and production
Pilot plant development
Stability and safety testing and experimenting
Research and development of additives or catalysts
Development of software or electronic analytical tools
Research and development of new or enhanced feedstocks
Research and development of novel polymer products
Development of methanol as well as ethanol products and processes
Extending the shelf life of currently available items
Chemical analysis of samples
Formulation and development of products for health and beauty
Automation of labor-intensive processes
Small batch sizes are scaled into full production from the laboratory
Development of software for industrial control systems
Software and component development for control rooms
Developing a design of a wastewater system
Developing a design of a safety system
Activities relating to quality control
Case Study

A Case Study of the R&D Tax Credit in the Chemical Industry

The chemical firm in the study has been developing and manufacturing ecologically friendly personal care products care, household, and industrial usage for more than 35 years.

Chemical Industry Activities

That Qualify for R&D Tax Credits

The research and development process at this corporation began with idea creation, which involved chemists, product managers, process engineers, technical specifications experts, and corporate leadership.

After developing the basic concept, the project went to the laboratory for comprehensive formulation and recipe development. Trials and evaluations of several formulations were done.

Following that, the prototype phase began, which entailed the creation of batches of ever-increasing size. The formula was scaled up for the R&D reactors, and the first prototype batch was manufactured by operations employees. After completing the prototype batch, the material was subjected to a series of tests to determine the surfactant qualities wanted in the final product. This was frequently an iterative process, with improvements made to fresh prototype batches and another series of testing following.

Environmental testing was performed on prototypes, which often comprised stability and temperature tests. Due to the range of ingredients used in personal care products, a number of skin irritation and other types of tests must be undertaken to certify the product. Due to the fact that certain tests were done by other resources, the interval between batches was considerable. Most of the time, the material needs to be sent to the customer for acceptance testing, and after the buyer has accepted the batch, full manufacturing will then commence.

Results Speak For Themselves

Each year, the business spends more than $1,500,000 on eligible research, resulting in a tax savings of $104,000.


Eligible research


Tax savings

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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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