Late 2023 and it is abundantly clear that Congress will not be repealing nor deferring anything relating to the Tax Cuts and Jobs Act (“TCJA”) concerning the new regulations requiring the capitalization and amortization of Section 174 costs any time soon. For tax year 2022 and most likely for all of tax year 2023, there doesn’t appear to be any chance of this law changing any time soon.
Think about it—only one out of every 20 eligible businesses takes advantage of the research and development (R&D) tax credit. That’s because many business owners don’t realize that their industry is ripe with eligible activities. While many industries have qualifying activities, an R&D tax credit study can help you determine which activities qualify.
Like the federal government, the state of Arizona provides a generous research and development (R&D) tax credit as an incentive to those who conduct R&D activities within the state. In Arizona, the R&D incentive provides an income tax credit for increased R&D activity within the state. Companies may also be eligible for a “basic research” credit if their payments made in cash to a qualified university or scientific research organization for research conducted in Arizona exceed a base period amount.
Electric vehicle (EV) charging station installations offer a great income tax credit for businesses and homeowners to attract and retain environmentally conscious consumers and employees. The 2022 Inflation Reduction Act (“IRA”) contains tax credits designed to support the widespread adoption of electric vehicles. The Alternative Fuel Vehicle Refueling Property Credit, IRC Sect. 30C, (“AFVRPC”) which the IRA expanded and extended to December 31, 2032, provides incentives to individuals and companies that install EV chargers.
Evaluation of Qualifying R&D Tax Credit Activities in the Construction Industry
Contractors that provide design-build services, use new and innovative construction techniques, and enlist engineers and architects to provide construction services are most likely to qualify for Federal and state research and development credits.
From IRS.gov:
If you filed a claim requesting a refund for an Employee Retention Credit (ERC or ERTC) and would now like to withdraw your claim, this page will tell you whether you can do so and, if so, how to withdraw your claim.
R&D provides a platform for creativity and innovation to flourish and your company to stay relevant. The research and development (R&D) tax credit provides motivation for companies to advance innovation in the United States.
Illinois is one of many states finally taking note of the R&D tax credit and how they are extremely beneficial for the economy and business growth throughout the state.
Thanks to these updated regulations, non-traditional software companies that are investing time and efforts into the development of internal use software to build and streamline their business functions, can expect to receive a substantial boost in their ability to claim R&D based tax incentives.
Using your R&D tax credit knowledge, you can then offer these specialty services to your clients. You can help with the process of capturing the correct R&D documentation throughout their daily operations and all future projects.
