R&D Tax Credits

Who qualifies for R&D tax credits?

Any U.S. business that conducts activities meeting the IRS four-part test qualifies: the work must be technological in nature, aimed at eliminating technical uncertainty, conducted through a process of experimentation, and related to developing or improving a product, process, software, or formula. No minimum size or spend required.

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Expanded Answer

Which businesses are eligible for the R&D tax credit?

A wide range of businesses can qualify, from early-stage startups to large corporations, as long as they are performing qualifying research activities in the United States.Eligible roles within a company typically include:

Engineers, developers, product managers, and designers (direct roles)CTOs, VPs, and team leads (supervisory roles)QA testers, lab technicians, technical writers, and research coordinators (support roles).

Businesses operating at a loss or with no income tax liability may still qualify through the payroll tax offset provision.Learn more about eligibility requirements at: https://www.irs.gov/businesses/research-credit

What Qualifies

Activities that commonly qualify

Developing new software features or platform capabilities

Improving performance, scalability, reliability, or security

Building internal tools or technical workflows that required experimentation

Testing different technical approaches to solve engineering challenges

What Does Not Qualify

Work that usually does not qualify

Routine bug fixes with no technical uncertainty

Visual-only updates or minor design changes

Marketing, sales, and customer support work

General maintenance that did not require experimentation

Work already solved through an off-the-shelf implementation

Example Case Study

Example of a business qualifying for the R&D tax credit

A mid-sized engineering firm is developing new design methods to improve energy efficiency in its projects. Its team of engineers, project managers, and technical staff regularly test different approaches, evaluate performance outcomes, and refine their designs based on real-world constraints.

Because this work involves technical uncertainty and iterative development, a portion of their employee wages and related costs may qualify. Even if the company is already profitable, these activities can generate significant tax savings through the R&D tax credit.

Quick takeaway

If your team had to work through technical uncertainty, there is a good chance the work deserves a closer look.

Common Industry Examples

Developing new products, features, or software functionality

Improving performance, speed, or scalability of existing systems

Designing or testing new processes or technical workflows

Building internal tools or infrastructure that required experimentation

Evaluating multiple technical approaches to solve a problem

Working through uncertainty related to architecture, integrations, or data systems

Curious if you are missing out on credits?

Start with a quick eligibility check. If it looks promising, we move to a light info request and one technical interview.

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