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

Imagine a platform company rebuilding part of its backend to improve speed and support a larger customer base. The engineering team tests multiple database structures, adjusts the API layer, and runs repeated performance evaluations before settling on a final approach.

In that scenario, the wages tied to those technical activities may qualify. The same can be true for contractor costs and certain cloud expenses when they are directly connected to the development effort.

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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

Tech companies with heavy R&D spend between 2022 and 2024

Startups now eligible for retroactive refunds under new thresholds

Larger companies accelerating previously amortized R&D expenses

Businesses shifting to immediate expensing for domestic R&D

Companies with mixed domestic and foreign R&D cost structures

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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