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What is the R&D Tax Credit?
The R&D Tax Credit is a dollar-for-dollar savings on current or future tax liabilities and its intention is to promote innovation and stimulate job growth. Brewing companies who take advantage of the credit realize substantial tax savings and increased cash flow which enables them to reinvest back into their business. A company in the brewery industry can expect to receive a federal credit of as much as 10% of the qualified costs incurred in analytical and experimental R&D activities. The best part about the tax credit is that it rewards risk – whether the initiative succeeds or not.
Examples of R&D Activities Within the Brewery Industry
- Developing the best process settings to improve yield, throughput, and overall beer quality
- Evaluating raw materials (e.g., multiple malts, hops, and yeasts) used in formulations
- Conducting small batch formulation test trials
- Conducting multiple rounds of testing to scale-up to production volume
- Testing for product’s organoleptic properties
- Developing new or improved bottle conditioning or canning processes
- Developing new or improved hopping techniques or varieties of hops
- Evaluating process enhancements and incorporating state-of-the-art machinery
- Testing improved filling and bottling methods to ensure longer shelf life
- Enhancing filling processes to improve water recycling and waste management.
Offset up to $250,000 in Payroll Tax
Eligible small businesses may elect to use up to $250,000 of the research credit against payroll taxes in any given year.