R&D Tax Credits Available for Companies Working to Push the Boundaries with Plant Based Products and Diets

R&D Tax Credits Available for Companies Working to Push the Boundaries with Plant Based Products and Diets

Posted by Jeffrey Feingold on 03.23.22

Consumers across the world are embracing the trend of plant-based eating and this global shift is here to stay. Research studies have shown that a well-planned, nutritious, plant-based diet is associated with a lower risk of obesity, heart disease, diabetes and stroke. Plant based diets are based on food that is derived from plants including whole grains, fruit, vegetables, nuts, seeds & legumes with very little amounts (if any) of animal products and/or proteins.

Plant based food businesses must be able to change and adapt to the new dietary trends and consumers’ ever-changing personal eating habits. These efforts to create better plant based products or more nutritious products typically involve extensive experimentation and testing of new formulations, recipes, process parameters, and packaging methods. Research and development tax credits are available to support companies that are actively creating or improving these ways.

R&D is needed to figure out what plants work best for taste, texture and color, but also have to ensure that we are getting the same healthy fats, proteins and nutrients that we would normally get from animal or dairy products. Plant based proteins are becoming increasingly popular and even necessary with more and more people switching to plant based and vegan diets. Creating healthier and cost effective plant based proteins and meals requires focused research and development. New foods such as veggie burgers that are engineered to look, feel and taste like a real beef burger is just one example of a product that was thoroughly researched. Cheese, eggs and other dairy products are being replaced with soy, tofu, cauliflower and other plants to offer the same protein, taste and texture, minus the animal product. Federal and sate R&D tax credits are available for these types of activities.

What is required for R&D tax credits?

The activities and associated expenditures of plant based food producers can qualify for the R&D tax credit if the activities meet the following four-part test established by the IRS:

  1. Qualified Purpose - The purpose of the research must be to create a new or improved product, process, or formulation, resulting in increased performance, function, reliability or quality.
  2. Technological in Nature – The research must rely on the hard sciences, such as engineering, physics, chemistry, biology or computer science.
  3. Elimination of Uncertainty – Activities must overcome some unknowns, such as uncertainty as to capability, optimal design, or optimal methodology. 
  4. Process of Experimentation – Experimentation can be demonstrated through prototypes, simulations, systematic trial and error, or other methods of evaluating alternatives to achieve a desired result.

Has your operation produced any new or improved vegan or plant based related products recently? Have you modified product formulations and/or the growing processes to increase yields, reduce the reliance on chemicals, accelerate or reduce weight gain, or other improvements to the efficiency of your operation? Have you modified product formulations and/or manufacturing processes to create plant based food products that taste better, are more nutritious, have better consistency, or have longer shelf lives? If you answered yes to any of these examples, then there is a strong chance that your company could benefit from an R&D tax credit assessment from Tax Point Advisors.

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

Here are just a few of the qualifying research activities that plant based food producers undertake that may translate into R&D tax credits:

  • Development of an innovative product or process
  • Hybridization or development of new strains of crops and plants
  • Creating or improving ways for larger harvest
  • Experimentation with new or different fertilizers (organic etc.)
  • Attempts to develop or implement new cultivation techniques
  • Development of new gene transfer technologies
  • The study of molecular targets and variability in individual responses to nutrients and dietary patterns
  • Development and/or implementation of automated processes
  • Improving existing product formulations to enhance sensory qualities including flavor, appearance, and texture
  • Making better processing & packaging systems to save product and money
  • Human consumption and nutritional tests to create the product

The proper identification and documentation for qualifying research activities and associated expenditures towards the R&D tax credit requires a thorough review of a company’s personnel and projects undertaken. Companies engaging in plant based food production often expend time and resources on qualified research that enable taking advantage of the R&D tax credit. A qualified R&D credit professional can conduct a thorough R&D tax credit study to assess which activities meet the IRS’ four-part test to qualify for the credits.

The R&D tax credit can help plant based food companies recapture some of the expenses relating to their research and development. If you think your plant based food company might be performing work that qualifies for the R&D tax credit, don’t let the potential tax savings go unclaimed. To learn more about the credit and how much you might save contact Tax Point Advisors at (800) 260-4138, or leave us a message below.

Fill out my online form.

Latest from the blog

Choosing a Firm You Can Trust

Read More

Advanced Manufacturing Tax Credit (AMIC)

Read More

Pharmaceutical Companies: Seize R&D Tax Credit Opportunities

Read More

Contact Us Today for a No Risk Assessment

Get Started