R&D Tax Credits for Consumer Products

Wages, contract labor, and the expenses of raw materials and supplies required in the conduct of research are all considered qualified costs.

The tax credit on research and development has been primarily focused on manufacturing ever since this was created in 1981. The credit is intended to encourage research conducted in the United States in the fields of product design and production. The R&D tax credit is available to a broad range of industrial companies, with consumer products accounting for a sizable percentage of this category. This category comprises electronics, apparel, furniture, luggage, and athletic equipment, among others. Wages, contract labor, and the expenses of raw materials and supplies required in the conduct of research are all considered qualified costs.

Qualified Research Activities for Consumer Goods Manufacturing

Product development for new or enhanced items
Enhancements to design that enhance usefulness, dependability, performance, or overall quality
Conceptual design and specification of product needs
Research alternative raw materials in order to reduce costs or enhance the quality of the product
Validation and testing of new or updated products
Prototypes and first articles
Developing and validating new or better manufacturing methods
Tooling, molds, and fittings design and construction
Secondary procedures such as coating and finishing techniques are being developed.
Design with the Aid of Computers
Programming for CNC machines
Through computer simulation, perform Finite Element Analysis (FEA) on product designs.
3D modeling as well as 3D printing rapid prototype techniques.
Product development and regulatory compliance require both destructive and non-destructive testing.
Case Study

Consumer Goods Manufacturing: A Case Study of the R&D Tax Credit

With more than 40 years of expertise in manufacturing innovative, high-quality goods, this firm has established itself as a market leader in the bowling industry. The products of this firm are the result of significant investment in highly trained, multi-disciplined team members, cutting-edge testing facilities, and industry-leading manufacturing methods.

Qualification for R&D Tax Credits

in the Manufacturing of Consumer Goods

Despite the apparent simplicity of bowling, a great deal of effort goes into developing balls, each of which has a distinct core, various materials, and even different finishes to offer the sort of spin and ball dynamics desired by experts and amateurs. During the conceptual design phase, this organization employed Pro Engineering CAD software. Initial design concepts were reviewed, and the program enumerates component characteristics such as shape, density, and specific gravities that contribute to the product's technical standards. The organization considered several design choices in order to choose and enhance the most suitable product design. Engineering drawings, schematic designs, models, as well as other technical documents were used to chronicle this period of development.

After rendering the conceptual design, the Pro Engineering program proceeded to the machine shop to create a master of the form wherein among the design parameters used were the gyration radius between two axes that is essential in the bowling balls’ design and manufacture.

Afterward, the master form was made in the shop and moved to the research and development facility, where urethane castings of the master shape were formed after the design's viability had been determined (which may take five or maybe more design iterations). This kicked off the process of creating some balls (usually approximately ten prototypes) for testing purposes in order to confirm the design and make necessary modifications.

Molds for manufacturing will be manufactured following acceptable laboratory testing. The molds were transferred to R&D, where they were used to create a few one-off balls to check that the molding was performed accurately and that all parameters were satisfied. If development progressed satisfactorily to this phase, a 90-ball test run was placed into production and then after the 90-ball test runs and it has been certified that all of the criteria and specifications were met, production shall then commence.

Results Speak for Themselves

R&D tax credits of approximately $300,000 in combined federal and state tax every year have been claimed already for several athletic product firms for many years, you can be one of them too.

R&D tax credits of approximately


Federal and state tax credits

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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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