Federal · Internal Revenue Service (IRS)
Credit for Increasing Research Activities (Research Credit, IRC section 41)
What it could cover: May apply if your project includes custom development or process R&D, not set-up alone.
May qualify if your project includes new or custom software or process work with real technical uncertainty and a process of experimentation. Ask your tax adviser which wages, supplies and contract costs count. Setting up an existing product is routine, so keep any development work and its records separate.
Ask your adviser: Which of our costs, if any, count as qualified research, and what records should we keep from the start?
Eligibility, amount and deadline
- Who can apply
- US taxpayers with qualified research expenses in the US. The work must pass a four-part test, including a process of experimentation, applied to each business component.
- What it pays for
- A credit on wages, supplies and contract costs of qualified research. Adapting an existing product or process to a customer's need, duplicating a product, and surveys or studies are excluded.
- Amount, as published
- Regular credit is 20% of the credit base (15.8% if the reduced-credit election is made), per the Form 6765 instructions.
- Deadline or intake
- Claimed on the annual tax return with Form 6765. No application window.

