R&D Tax Credit
For businesses in multiple industries looking to reduce
Federal and State tax Liability
What is the
R&D Tax Credit?
R&D Tax Credits are federal and state incentives that reward businesses for investing in innovation. These credits reduce a company’s tax liability dollar-for-dollar for qualified research activities, such as developing new products, improving processes, or enhancing software.
Also known as the Research and Development tax credit, these credits incentivize U.S. based research and development activity. The Protecting Americans from Tax Hikes (PATH) Act in 2015 made this a permanent tax credit and extended the benefits to startup companies.
How R&D Tax Credits Work
The R&D Tax Credit is designed to stimulate innovation by offsetting the costs of research-related activities.
Companies can claim the credit annually by identifying and documenting qualifying expenses, including:
Startups and small businesses may be able to apply the credit toward payroll taxes, even if they are not yet profitable.
How to Claim R&D Tax Credits
To claim the R&D tax credit, businesses must file IRS Form 6765, Credit for Increasing Research Activities, as part of their timely filed federal income tax return, including extensions. This form reports the qualified research expenses (QREs) incurred during the tax year.
If you missed claiming the credit in prior years, you may also file amended tax returns—typically going back up to three years—to retroactively claim the R&D credit.
Federal and State R&D Tax Credits
Businesses across the U.S. may qualify for valuable R&D tax credits at both the federal and state level. While the federal R&D credit is available nationwide, many states also offer their own R&D incentives.
Each state’s program is unique—some mirror federal rules, others have their own qualifications, benefits, or filing requirements.