Many construction contractors do not realize their activities may qualify for lucrative federal and state research and & development (R&D) tax credits. In fact, many of the activities conducted by contractors and subcontractors – particularly those working in the construction industry – do indeed qualify, and the benefit can mean tens of thousands of dollars in tax savings.
As engineering firms develop new products and design new concepts, there’s a good chance that their activities may qualify for federal and/or state R&D tax credits to offset the significant cost of development.
Manufacturers may qualify for significant tax savings through qualifying research and development (R&D) tax credit activities. Federal and state R&D credits can mean a significant reduction in tax liabilities, enabling manufacturing companies to reinvest in their business with the considerable savings.
While many activities undertaken by software developers indeed qualify for federal and state R&D credits, they are often not claimed due to misconceptions about qualification and complexity. More recent taxpayer-favorable IRS rules boost opportunities for software developers to claim R&D tax credits for internal use software (IUS) software.
While more than 14,000 U.S. companies claim federal R&D credits annually, less than 33% of companies that qualify for the credits actually apply for them.