Can I Claim R&D Tax Credits in Arkansas?
Yes, you can claim R&D tax credits in Arkansas. The state offers a research and development tax credit program known as the In-House Research Income Tax Credit.
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The R&D Tax Credit is a tax benefit available to all businesses, regardless of their size, that engage in research and development activities in the United States. This credit is not limited to scientific fields or research laboratories, but rather, it can be applied to various industries and businesses. The R&D tax credit was established to encourage research and development activity within the US. Over time, an increasing number of companies have been utilizing this tax credit. In 2015, the Protecting Americans from Tax Hikes (PATH) Act not only made the R&D tax credits permanent but also extended the benefits to startups.
What are the Potential Benefits of the R&D Tax Credit?
Qualified companies can achieve substantial cost savings through the utilization of R&D tax credits. These benefits include:
- Increasing Cash Flow
- Federal and State Dollar-for-Dollar Income Tax Reduction
- Claim Credits for Open Tax Years Going Back 3-4 Years
- Reducing Your Tax Rate
$1.6 BILLION
Who Can Claim the R&D Tax Credit?
There used to be a prevailing misconception that R&D tax credits were limited to individuals in lab coats or those engaged in the development of top-notch products. However, it's important to understand that R&D credits have a wider and more inclusive application than most people are aware of.
Many companies, regardless of size or industry, qualify for Research and Development (R&D) Tax Credits from the federal government. However, a large number of these companies are unaware of their eligibility. This means that thousands of companies are missing out on the opportunity to claim substantial R&D tax credits at both the federal and state levels.
The R&D tax credit applies to the activities that fuel your business's growth.
- Developed new products
- Improved existing products
- Developed software for internal or external use
- Improved manufacturing processes
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The activities that qualify for the Arkansas R&D tax credit are the same ones driving growth in your business.
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10,700
How Do I Claim the R&D Tax Credit?
On average, businesses can usually secure a federal R&D tax credit equivalent to 7-10% of their qualifying expenditures. To illustrate, an individual with a $100,000 yearly W2 income, such as a software developer, engineer, or lab technician, may realize tax savings of up to $10,000.
Qualifying research expenses in your company usually consist of employee compensation, materials, and contracted services. To substantiate these expenses, you can use a variety of documentation such as payroll records, financial records reflecting supply or contract research expenses, and vendor invoices.