Determine the estimated amount of R&D tax credit you’re eligible for from the 2022 tax year in three easy steps:
Select your industry
Enter the total payroll amount from 2022
Select the criteria that apply to your business
What is the Research and Development Tax Credit?
The R&D tax credit can provide significant savings on expenses incurred for qualifying activities. It is a dollar-for-dollar credit against taxes owed or taxes paid. It was initially created to incentivize US-based research and development activity. Through the Protecting Americans from Tax Hikes (PATH) Act in 2015, the R&D tax credit was extended to startups and small business groups.
Which Companies Qualify?
Companies of any size that perform qualified activities are eligible for the R&D tax credit.
Which Activities Qualify?
The following sample activities qualify for the R&D tax credits:
Creating improved products, processes, formulas, software, and techniques
Automating or improving internal manufacturing processes
Designing tools, jigs, fixtures, and molds
Integrating new equipment
Development of software and firmware
Mobile application development
Internet of Things (IoT) development
Development of data center, big data, and data mining tools
Integration of APIs and other technologies
Manufacturing new or improved products
Developing prototypes, first articles, models
Evaluation of alternative materials
Development of firmware
Network hardware and software development and optimization
Which Industries Qualify?
Tool & Die
Architecture & Engineering
Food & Beverage
Mortgage & Banking
Oil and Gas
Any industry that develops or improves processes or products
Can Start-Up Businesses and Small Business Offset Payroll Taxes?
Yes. For 2016 and subsequent tax years, businesses can use their R&D tax credits to offset payroll tax providing they meet the following requirements:
Gross receipts 1 for 5 years or less, which means total revenue returns and allowances, including all amounts received for services, income from investments, bank interest, and all other incidental or outside sources.
Less than $5 million in gross receipts in the year the R&D credit is claimed
Qualifying research activities and expenditures
Note: For a company wishing to use its 2017 R&D tax credits to offset its payroll tax in 2018, it could not have had any gross receipts prior to 2013.