Architects, It’s Time to Claim What You’ve Earned: R&D Tax Credits

If you run or work at an architecture firm, you’ve probably never thought of your work as “research and development,” but within the tax code there’s a longstanding incentive that actually rewards many of the activities your team works on day-to-day. You might be solving structural complexities, designing for sustainability, and tailoring solutions to site-specific challenges — but up until 2023, the IRS could be skeptical of that kind of work.

That changed in May 2023, when a landmark ruling opened the door for architects to better qualify for one of the most valuable incentives in the tax code: the R&D tax credit. This shift could mean tens (or hundreds) of thousands of dollars in tax savings per year or more — just for the work you’re already doing.

Let’s break down what changed, what qualifies, and how your firm can benefit, starting now.

Why Now Is the Time for Architects to Explore the R&D Credit

We’re in a pivotal moment for architecture. Between rising construction costs, the pressure to meet energy codes, and the demand for sustainable and efficient design, firms are constantly innovating — and often doing so without guaranteed outcomes.

The R&D tax credit was designed exactly for this kind of work. But until recently, the IRS didn’t always interpret the law in a way that favored architectural services. That changed with updated guidance in May 2023, which expanded eligibility for activities like:

• Custom energy-efficient design
• Structural experimentation
• Modeling and simulation
• Testing materials and sustainable systems

This is a strategic opportunity for firms to offset costs, reinvest in talent and tools, and remain competitive in an increasingly technical field.

What Kind of Work Qualifies as R&D in Architecture?

Architects often assume “research” must mean lab coats and patents. But the IRS now recognizes that architectural design frequently involves a structured process of experimentation and technical problem-solving.

Here are some common qualifying activities in architecture:

• Designing buildings that meet unique energy or environmental performance standards
• Using BIM or CAD tools to iterate structural layouts
• Testing airflow or daylighting strategies across design variations
• Experimenting with new materials for thermal performance or resilience
• Creating or refining modular construction systems

🧠 Quick Rule of Thumb: If you’re solving technical problems without an immediate guaranteed path forward, you may qualify. 

Do You Qualify? The IRS Four-Part Test for Architects

To determine eligibility, the IRS uses a four-part test. Here’s how it applies to your firm:

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This framework doesn’t require groundbreaking discoveries — just technical iterations with a clear and measurable goal.

A Real-World Example

A mid-sized architecture firm redesigned an aging public library to meet net-zero energy targets. They:

• Used energy modeling to evaluate HVAC and insulation strategies
• Ran multiple daylighting simulations in BIM
• Tested three façade designs for thermal load
• Coordinated with engineers on system integration challenges

They kept detailed records and documented ~1,000 hours of qualifying time across 4 employees. After calculating wages, modeling software expenses, and engineering collaboration fees, their Qualified Research Expenses (QREs) totaled $180,000.

This one project alone yielded a total credit of $14,400.

What You Can Claim: Understanding QREs and Credit Value

The average architecture firm may be eligible to recoup 6.5% to 10% of their qualified research expenditures (QREs).

Qualified costs may include:

• Wages for employees doing design, modeling, or analysis
• Supplies used in physical testing or prototyping (less common, but happens especially in the realm of building alternatives like façades).
• Contract research for certain project requirements (e.g., engineers, specialty consultants, etc.)

Startups or small firms under $5M in annual gross receipts may also offset up to $500,000 in payroll taxes—a powerful boost for early-stage firms, regardless of profitability.

The Process: 5 Steps to Claiming Your Credit

Here’s how to move from “we think we qualify” to “we’re getting money back.”

Step 1: Identify Projects with Eligible Activities

Look for projects involving:

• Design iteration
• Environmental performance testing
• Engineering or software experimentation
• Custom system development

Step 2: Document Everything

Good documentation is non-negotiable. Track:

• CAD/BIM models and versioning
• Meeting notes and testing data
• Timesheets or activity logs tied to R&D work
• Receipts for materials or simulation tools

Pro tip: Invest in a project management system (and use it!) like Monograph or Deltek.

Step 3: Calculate QREs

Use payroll data, invoices, and project records to calculate:

• Employee time spent on qualified tasks
• Supplies and tools directly related to experimentation
• Contractor work that supported eligible R&D

Step 4: Choose a Credit Calculation Method

• Traditional Method: 20% of QREs above a fixed base. Best for mature firms with historical data.
• ASC Method: 14% of QREs above 50% of the last 3 years’ average. Easier for newer firms.

Step 5: File Forms and Submit

• Form 6765: Credit for Increasing Research Activities
• Form 8974 (if claiming payroll offset)
  Attach your documentation and include it with your corporate return.

Common Misconceptions That Hold Firms Back

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Designing custom solutions, solving site constraints, and testing systems is R&D.

Strategic Use of Savings

This credit isn’t just about compliance—it’s about capacity.

Firms often reinvest these savings in:

• New hires or software tools (e.g., daylighting analysis, energy modeling)
• Sustainability consultants or LEED coordination
• R&D-focused marketing or proposal efforts
• Offsetting fixed overhead to stay competitive

How We Help at TaxTaker

We make this simple for architecture firms. Our R&D credit team will:

• Review your past 2–3 years of projects for eligibility
• Estimate your potential credit
• Help you gather documentation
• Calculate and file everything — audit-ready reports, always
• Charge nothing upfront

You get expert support and you only pay if you can get a credit.

Want to See if You Qualify? Let’s Take a Look

If you’ve completed even one project in the past three years that involved design iteration or technical experimentation, you may be leaving money on the table.

Schedule a free R&D review — we’ll walk you through it in under 30 minutes.

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