R&D Manufacturing

As a business owner, you recognize the importance of continuous investment in your manufacturing business. But, as the manufacturing landscape becomes increasingly competitive and globally inclusive, you may ask yourself: “Where can I find the extra capital I need to drive my business forward?” One relatively straightforward way to do this is to take advantage of the Research and Development (R&D) tax credit, a dollar-for-dollar tax credit that may be applied against taxes for the generating business.

Less than one-third of eligible companies realize they qualify for the R&D tax credit. For federal purposes, the R&D credit allows qualifying taxpayers to receive up to 14% of qualified research expenditures (QREs), such as in-house research expenses and contract research expenses. QREs can come from a wide variety of expenses but generally will include wages paid to qualifying employees and associated expenses used to develop a new product or process. Examples of manufacturing activities that may qualify include:

  • Designing manufacturing equipment
  • Optimizing manufacturing processes
  • Designing and developing tooling and equipment
  • Designing and testing prototypes

In addition to federal R&D credits, more than 30 states offer some version of an R&D credit. Planning accordingly can allow your business to reap twice the rewards on an investment you’re already making. Most states offer credits ranging from 2% to 6%, potentially allowing your business to return 6% to 14% of your original investment.

Freed Maxick Can Help

New call-to-actionNeed help creating an R&D tax credit survey to help determine which of your manufacturing activities qualify? Please contact Freed Maxick at 716.847.2651 or fill out our contact form.

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