R&D Tax Credits for the Chemical & Formula Industry

Refunds are available for companies performing research within the Chemical & Formula Industries. The research credit provides dollar-for-dollar cash savings each year for companies performing activities related to the development of new or improved products and processes. These benefits could provide much needed cash to hire additional employees, increase R&D, expand production facilities, etc.

Many companies involved with chemicals & formulas are unaware that their efforts within designing and developing their products can yield a large amount of research credits. Examples of R&D activities related to the industry as well as potentially qualifying job titles are listed below.

Examples of Qualifying R&D Activities

• Automation of internal processes by developing and implementing new hardware and software systems
• Development and evaluation of new, improved, or more reliable raw materials, products, or formulas
• Experimentation to increase product yield, improve shelf-life, or discover new applications for existing chemicals
• Generating pilot batches of new products for testing and validation
• Refining manufacturing methods to improve efficiency or reduce environmental impact
• Support of direct research activities, such as quality testing, maintaining lab equipment, data collection, and regulatory compliance work

Potentially Qualifying R&D Job Titles

• Analytical Chemist/Scientist
• Chemical Engineer
• Formulation Chemist/Scientist
• Lab Assistant, Lab Technician
• Quality Assurance/Control (QA/QC) Analyst, Associate, Chemist/Scientist, Manager
• Research Associate, Research Scientist

AMT Offset

For tax years beginning after December 31, 2015, eligible small businesses (those with $50 million or less of gross receipts) may claim the research credit against AMT liability. ​​​​​​​

Up to $250,000 in Payroll Tax

Qualified start-up companies may elect to use up to $250,000 of the research credit against payroll taxes. Treasury Regulations have substantially broadened the range of taxpayers who are eligible for the credit. Start-ups to publicly traded businesses who were previously unable to realize a benefit from this lucrative tax credit should reassess their eligibility.