Posted by Jeffrey Feingold on 10.24.24

Innovators. Problem solvers. Creative thinkers. Engineers are often described by these attributes, and many of the activities they perform on a daily basis may qualify for valuable research and development (R&D) tax credits. The federal R&D tax credit, designed to stimulate innovation, growth and competitiveness, can offset the significant cost of development. What’s more, most states offer R&D credits that can significantly reduce an engineering firm’s state income tax burden.

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.

Engineering and R&D

Whether they are creating mechanical, structural or electrical systems, engineers may not be aware that many of their day-to-day activities meet the qualifications for R&D tax credits. And now that the federal R&D tax credit has been made permanent, engineering firms – including small and midsize firms – can plan ahead with even more inventive ways to strategically plan, qualify and report their R&D expenses to qualify for the credit.

Typical Qualifying R&D Credit Activities for Engineers

• Building information modeling
• Determining alternative structural design
• Improving or determining alternative heating and cooling systems
• Improving or developing alternative ventilation for a structure
• Developing or improving lighting within a structure
• Developing alternative electricity conduction systems
• Developing alternative water flow / plumbing systems
• Toxic waste and other waste disposal processes integrated into the structure
• Integrating transportation systems into the functional design of the structure
• Sustainable design
• CAD modeling
• New technology
• Space utilization
• Design testing
• New materials
• Environmental design
• Environmental impact studies

Click here to see if your engineering activities qualify for R&D tax credits

Engineering Expertise at Tax Point Advisors

Tax Point Advisors, a team of engineers, CPAs and tax attorneys, focuses on helping CPAs and their clients successfully apply for federal and state tax credits, as well as other specialty tax services. With a growing number of offices across the country, we offer CPAs and their clients national expertise with a local touch. Our professionals conduct a thorough on-site R&D review process for every tax credit study. Tax Point Advisors' audit rate is under 5%, and our industry-leading audit success is unmatched. 

Find Out if Your Activities Qualify

The R&D tax credit can be a lucrative incentive for innovative businesses. Given the new permanent nature of the tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities. Any engineering activity must meet the four-part test to qualify for R&D tax credits.

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 businesses that may qualify for R&D tax benefits. For more information, visit our website, call us at 800-260-4138 or please leave us a message below.