Does your manufacturing business improve a process or product for the automotive industry? Do you work to make an automotive product cleaner or more efficient? Or, perhaps you provide technical solutions that make production work more efficiently. If you are conducting any of these activities, are you taking advantage of the research and development (R&D) tax credit?
Texas has firmly established itself as a national leader in business innovation and technology. One of the most anticipated topics in tax discussions is whether the state will extend and modify the Texas Research and Development Credit (R&D Credit), which is currently set to expire on December 31st, 2026.
Does your aerospace business resolve technological challenges through the innovative use of processes and products? Despite its name, the research and development (R&D) tax credit program includes far more activities than research, patents and laboratory work.
House Republicans' Fiscal Year 2025 Budget Resolution, passed on February 25, 2025, and is poised to make significant changes in the tax landscape with a $4.5 trillion tax-cut plan. A key component of this initiative is the proposed elimination of Section 174 amortization, a rule requiring businesses to spread their R&D deductions over five years (and 15 years for foreign costs) since 2022. This change may allow for immediate expensing and enhance Section 41 R&D tax credits.
Healthcare businesses that develop software for the industry across the US are often missing out on federal research and development (R&D) tax credits. This credit is designed to reward companies for increasing their investments in research and development. However, many healthcare companies developing software may not realize they could qualify for this incentive.
Video games have become a popular form of entertainment over the past several decades, and the gaming market is projected to continue its growth. As video games have become more technically complex, software developers have had to enhance graphics, improve performance, and create new features. The nature of game development makes game developers strong candidates for Research and Development (R&D) tax credits. These tax credits encourage innovation by allowing companies to claim up to 22% of their qualified research expenses (QREs) as tax
credits.
Artificial intelligence (AI) is transforming the way businesses operate. The influence of AI extends beyond the technology sector; companies across various industries are adopting AI software tools and developing their own proprietary technologies to boost efficiency, foster innovation, and maintain a competitive advantage.
Software development is often overlooked when it comes to research and development (R&D) tax credits, which is rather ironic when you think about the innovation, creativity and invention that is such an intrinsic part of this industry. Any time your software company makes improvements to products or processes, there is a good chance that your activities may qualify for valuable R&D tax credits that can greatly reduce your tax burden.
As an industry significantly invested in research and development (R&D) activities, aerospace companies can further reinvest in their growth by qualifying for federal and state R&D tax credits.
New Hampshire offers a research and development (R&D) tax credit for qualified R&D expenditures made within New Hampshire during the fiscal year. This credit reduces the tax burden for eligible taxpayers by covering wages that meet federal credit requirements. The program reflects the state’s commitment to fostering an environment where businesses and entrepreneurs can pursue innovation and growth. The R&D Tax Credit is designed to stimulate the economy by attracting new companies to the region and encouraging existing ones to expand.
