R&D Tax Credits:
A Business Guide
RK Partners can help you navigate R&D tax credit laws in an efficient and compliant manner.
RK Partners can help you navigate R&D tax credit laws in an efficient and compliant manner.
The federal R&D tax credit is a long-standing tax incentive designed to encourage companies to invest in innovation.
Although many businesses assume it only applies to laboratories or major engineering teams, the credit can apply across a wide range of industries, including software, manufacturing, agriculture, life sciences, engineering, and more. RK Partners’ current article notes that many eligible businesses still do not claim it.
The credit is generally calculated from qualified research expenses and claimed on Form 6765. The IRS describes qualified research using a four-part framework that focuses on technological work intended to develop or improve a business component through experimentation.
Many companies assume they do not qualify because they are not a “research company” are improving existing products rather than inventing something brand newoutsource part of their development workbuild internal or customer-facing softwaredo not maintain R&D accounts labeled explicitly as “research."
In practice, eligibility often turns on the nature of the technical work performed and how well it is documented, not on whether the company sees itself as doing “formal R&D.” The IRS requires taxpayers to connect research activities, business components, and qualifying expense categories clearly when claiming the credit.
Many companies assume they do not qualify because they are not a “research company” are improving existing products rather than inventing something brand newoutsource part of their development workbuild internal or customer-facing softwaredo not maintain R&D accounts labeled explicitly as “research."
In practice, eligibility often turns on the nature of the technical work performed and how well it is documented, not on whether the company sees itself as doing “formal R&D.” The IRS requires taxpayers to connect research activities, business components, and qualifying expense categories clearly when claiming the credit.
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