Virginia R&D Tax Credit Case Study
The R&D tax credit is one of the most valuable credits leveraged by companies. The R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. The R&D tax credit can provide a significant reduction to current and future tax liabilities and a source of cash.
Benefits
- Up to 13.5 cents of R&D tax credit for every qualified dollar
- Dollar-for-dollar reduction in your federal and state income tax liability
- Credit carried forward up to 20 years
Qualifications
More companies in Virginia can now qualify for the R&D tax credit. Companies are able to qualify R&D activities beginning with the development of concepts and extend to the point where a product, process, formula, or other business component is ready to be commercially released. If you are engaged in any research activities, looking into a potential R&D tax credit may be a great benefit.
Case Study
A firm in Norfolk, Virginia designs components for the maritime industry. The company claims R&D credits each year for the design and development activities of its engineers. This project involved a multi-year study covering the tax years 2018 – 2021. The Company qualified for the federal R&D Tax Credits of $196,000 and an additional $98,235 in Virginia state R&D Tax Credits.
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FEDERAL
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VIRGINIA
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Year
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Total QREs
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Credit
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Total QREs
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Credit
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2021
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$750,000
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$70,000
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$750,000
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$35,100
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||
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2020
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$550,000
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$45,500
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$550,000
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$20,625
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2019
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$500,000
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$42,000
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$500,000
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$21,000
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||
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2018
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$450,000
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$38,500
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$450,000
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$21,510
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| Total | $2,250,000 | $196,000 | $2,250,000 | $98,235 | ||