R&D Tax Credits for the Life Sciences Industry

Refunds are available for companies performing research within the Life Sciences Industry. 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 the life sciences 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
• Design and manufacturing of prototype medical devices, drug delivery systems, or pharmaceutical packaging apparatuses
• Development and testing of new pharmaceuticals, therapies, biologics, or other medical compounds
• Improving existing products to increase shelf life, reduce side effects, or prolonged duration of therapeutic activity
• Production of clinical trial lots and initial scale-up of manufacturing processes
• 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
• Analytical Scientist
• Control System Lead
• Drug Product Engineer
• Good Manufacturing Practices (GMP) Analyst
• Lab Manager
• Lab Technician
• Mechanical Engineer
• Process Engineer
• Process Integration Manager
• Quality Assurance/Control (QA/QC) Specialist, Manager, or Director
• Research Associate, Research Scientist
• Validation Engineer

Orphan Drug Tax Credit

Companies that have qualifying activities for the ODC may also qualify for the R&D Tax credit, but both credits cannot be claimed for the same expense. Typically, the ODC often provides a more lucrative benefit than the R&D Tax Credit. Yet, companies often fail to fully maximize the ODC that they are otherwise eligible to claim due to a lack of knowledge, expertise and/or resources. » Learn More

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.