The U.S. R&D Tax Credit exists to reward American companies for their investment in research and development activities domestically. Each year, the R&D Tax Credit yields billions of dollars of benefits to companies engaged in qualifying research.
How Does The R&D Tax Credit Work?
Signed into law by Congress in 1981, The U.S. Research and Development Tax Credit – sometimes called the Research and Experimentation Tax Credit – helps companies remain competitive by allowing a reduction of federal and state income taxes owed for qualified expenditures.
Benefits of R&D Tax Credits
Investing in research and development is vital to innovation, and innovation is the driving force of the American economy.
With no limit on the R&D Tax Credit funding, U.S. businesses can stand to receive several potential benefits. These benefits might include:
- A reduction in your company’s federal and state tax liabilities.
- Carrying forward money saved to reinvest in further research and development.
- An increase in your cash flow.
- Generating higher company profits and solidifying your business presence.
- Gaining the technological advancements to maintain competitiveness.
Many Types of Businesses Qualify for R&D Tax Incentives
It is a common misconception that research and development refers only to research activities conducted in laboratory environments.
Today, the list of industries and sectors that can take advantage of the R&D Tax Credit is growing. In fact, a vast number of American businesses (of all sizes and across a wide range of sectors) may already be involved in activities that qualify but are not yet claiming the credit.
Learn more about what qualifies for R&D and how it may benefit your business by contacting one our our experts.