How R&D Tax Credits are Helping the Medical Industry Find Solutions to the Coronavirus

How R&D Tax Credits are Helping the Medical Industry Find Solutions to the Coronavirus

Posted by Jeffrey Feingold on 02.18.20

In recent news, the U.S. Centers for Disease Control and Prevention partnered with the University of Pittsburgh’s Center for Vaccine Research. Both obtained samples of the coronavirus in hopes of developing interventions including a vaccine. Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases. Pittsburgh’s Center for Vaccine Research is one of the few laboratories nationwide designed to be able to handle pathogens of concern like the coronavirus, which has recently killed more than 1,100 people, nearly all of them in mainland China.

For over three centuries, immunological research has led to major health advances across the world. Medical research and development (R&D) is a long process that is commonly pricey and time consuming due to research investments, and maintaining safety requirements and regulations. Given the uncertainty of profitability, the development of vaccines involves risks in research and development that may qualify for federal and state R&D tax credits. R&D tax credits can support companies engaged in expanding our understanding of the immune system as well as developing new clinical and commercial applications for immunology-related findings.  

The R&D Tax Credit

The federal government implemented the Research and Experimentation tax credits in 1981 to create jobs and spur technology in the U.S. Known as R&D tax credits, the program was meant to be a temporary measure to give the economy a boost. Subsequent modifications simplified the credit and made it available to a much wider variety of activities and industries. Given the popularity of the R&D tax credit program, many states followed suit by establishing their own programs. Today, more than 40 states offer R&D credits with attractive features and additional advantages.

For years, the tax credit program was temporary, hastily extended more than a dozen times since its passage in 1981. Now that federal R&D tax credits were made permanent in 2015, there is no better time to reinvest in your pharmaceutical business by getting credit for your qualified R&D activities.

Download our free e-book: The Business Owner's Guide to R&D Tax Credit Credits 

The Opportunity

Since its inception, the federal R&D tax credit was meant to encourage industries including the medical industry to invest in the development of new or improved business components. More specifically, the following activities may qualify immunology companies for the R&D tax credit:

  • Drug research
  • Preclinical and discovery research for the development of new compounds
  • Clinical R&D
  • Quality assurance
  • Supply expenses linked directly to qualified research activities
  • Employee wages for in-house research expenses
  • Third-party contract research to supplement in-house activities for qualifying pharmaceutical research expenses
  • IT software programs to maintain and organize test or lab results

Immunology is an extremely diverse field of medical research. Medical and pharmaceutical related R&D efforts are crucial to improving the lives of those suffering from a wide range of diseases including this new Coronavirus currently in the media. Innovative companies investing in medical research should take advantage of R&D tax credits to increase their chances of success.

R&D tax credit eligibility largely depends on wheth­er the work you are conducting meets the criteria established by the IRS in its four-part test. The experts at Tax Point Advisors can help you capture your full R&D tax credits for eligible activities and manage the documentation process.

Request a free assessment to determine qualifying R&D tax credit eligibility.

Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with CPAs and their business clients who may qualify for R&D tax benefits. For more information contact us at (800) 260-4138, or please leave us a message below.


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