What is the Research and Development Tax Credit?
The R&D Tax Credit, first enacted in 1981, has been one of the most valuable credits leveraged by companies. Every year, the R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. Thousands of companies take advantage of the credit across several industries. Some of the common industries that qualify for the R&D tax credit include, but are not limited to:
Estimate Your Benefits Instantly
Use our calculators for an estimate of state and federal R&D tax credit benefits or to determine if you can offset payroll tax using the R&D tax credit. It's easy to use and free. If at any time you have questions, contact us. We are here to help you realize your maximum tax benefit.
What are the Potential Benefits of the R&D Tax Credit?
There are several benefits to realizing the R&D tax credit.
These benefits can include the following:
- 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
- Increased in earnings-per-share
- Reduction of your effective tax rate
- Improved cash flow
- Credit carried forward up to 20 years
- Recent regulatory developments make claiming the R&D tax credit for companies much more feasible
- Look back studies can recognize unclaimed credits for open tax years
(generally 3 or 4 years)
Qualified research activities are defined by the four-part test outlined below
Research and Development Tax Insights
KBKG Tax Insight: New and Improved Changes to Research and Development (R&D) Tax Credit: Furthering the American Recovery from the Coronavirus
Senator Chris Coons of Delaware recently introduced legislation (S. 3593) called “Furthering Our Recovery With American Research & Development Act” (“FORWARD”), which makes changes to and expands Internal Revenue Code Section 41: Credit for Increasing Research Activities (“IRC 41”). Applying these modifications to the existing law could allow companies that invest in the research and … Read More
As featured in Accounting Today Internal Revenue Service examinations of the research tax credit can burden both the client and the IRS. Throughout most of its decades-long history, research credit audits have exposed areas of misunderstanding and, in many circumstances, led to major disagreements. There is little “bright line” guidance, and each examiner must consider … Read More
The Commonwealth of Virginia made key changes and extended the income tax credit for conducting qualified research and development in Virginia. Key changes include: A three (3) year extension of the credit from tax years beginning before January 1, 2022 to tax years beginning before January 1, 2025 Beginning January 1, 2021, an increase in … Read More
At the end of March, the U.S. government passed the Coronavirus Aid, Relief, and Economic Securities (“CARES”) Act to provide financial and emergency relief to American businesses, the American people, and the U.S. economy in whole. The objective of the stimulus package for businesses was to provide a lifeline of cash and liquidity that would … Read More
KBKG Tax Insight: Architectural Firms Can and Do Qualify for the Research and Development Tax Credit
Who says architectural firms can’t qualify for the research and development (R&D) tax credit? Not the United States Tax Court (USTC). The USTC recently granted summary judgment in favor of an architectural firm that claimed the R&D tax credit. At the heart of this judgment was whether Populous Holdings, Inc. (Populous) incurred contract research expenditures … Read More
As featured in Accounting Today We’ve all experienced a situation where our intent and the meaning of something we’ve said or written was misinterpreted by the recipient. There are numerous articles available for many situations to help us avoid this problem, such as the how to ask the boss for a raise or the best … Read More
KBKG is pleased to announce the addition of Business Development Regional Director Todd French to KBKG’s Midwest Regional office, who is relocating from the KBKG Texas office after serving the Dallas-Ft. Worth Community. Todd French began his finance career 15 years ago as a banker for a large regional bank where he was trained to … Read More
We recently added Research & Development Tax Credits Director Jonathan Tucker to our Southeast office‘s team of experts. Jon brings over 15 years of experience providing federal business tax advisory services to clients in various industries including technology, manufacturing, transportation, healthcare, retail and consumer products, hospitality, media and entertainment, financial and other professional services industries. … Read More
We are excited to announce that we are expanding our New York City office in Midtown with the addition of Research & Development Tax Credit Service Director Paul McVoy, who is relocating from KBKG’s Pasadena Headquarters. While KBKG has had a strong presence in the New York City area for several years, Paul’s addition will … Read More
We recently had the opportunity to interview our newest R&D Tax Credit team member, Mark Bodenstab. Mark joined KBKG after retiring from the IRS and will be a national Director providing services out of the Northeast office. In his role at KBKG, Mark will serve in a similar capacity to Jack Jolly who is a … Read More