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Try Our R&D Tax Credit Calculator.

See how much you qualify to receive from the IRS.

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Based on your responses, we believe that you are not currently eligible for the R&D tax credit.

Please check back with us if you perform any product or software development-related work in the future.

How To Use the R&D Tax Credit Calculator

Determine the estimated amount of R&D tax credit you’re eligible for from the previous tax year in three easy steps:

  1. Select your industry
  2. Select the criteria that apply to your business
  3. Enter the total payroll amount from the previous tax year

What is the R&D Tax Credit?

The R&D tax credit can provide significant savings on expenses incurred for qualifying activities and qualified research expenses. It is a dollar-for-dollar credit against taxes owed or taxes paid. It was initially created to incentivize US-based research and development activity. Through the Protecting Americans from Tax Hikes (PATH) Act in 2015, the R&D tax credit was extended to startups and small business groups. 

The benefits include:

Increase Cash Flow

Reducing Your
Federal Tax Rate

Federal and State
dollar-for-dollar income tax reduction

Claim credit for
an open tax year going back 3 to 4 years

Which Companies Qualify?

Companies of any size that perform qualified activities are eligible for R&D tax credits

Which Activities Qualify?

The following sample activities qualify for the R&D tax credits:

  • Creating improved products, processes, formulas, software, and techniques
  • Automating or improving internal manufacturing processes
  • Designing tools, jigs, fixtures, and molds
  • Integrating new equipment
  • Development of software and firmware
  • Mobile application development
  • Internet of Things (IoT) development
  • Development of data center, big data, and data mining tools
  • Integration of APIs and other technologies
  • Manufacturing new or improved products
  • Developing prototypes, first articles, models
  • Evaluation of alternative materials
  • Development of firmware
  • Network hardware and software development and optimization
  • Developing simulators

Which Industries Qualify?

  • Aerospace
  • Tool & Die
  • Metal Fabrication
  • Plastics/Injection Molding
  • Consumer Products
  • Manufacturing
  • Architecture & Engineering
  • Food & Beverage
  • Financial Services
  • Mortgage & Banking
  • Construction/MEP
  • Software Development
  • Chemical
  • Contract Manufacturing
  • Pharma
  • Oil and Gas
  • Blockchain Development
  • Game Development
  • Any industry that develops or improves processes or products

Can Start-Up Businesses and Small Business Offset Payroll Taxes?

Yes. For 2016 and subsequent tax years, businesses can use their R&D tax credits to offset payroll tax providing they meet the following requirements:

  • Gross receipts 1 for 5 years or less, which means total revenue returns and allowances, including all amounts received for services, income from investments, bank interest, and all other incidental or outside sources.
  • Less than $5 million in gross receipts in the year the R&D credit is claimed
  • Qualifying research activities and expenditures

Note: For a company wishing to use its 2017 R&D tax credits to offset its payroll tax in 2018, it could not have had any gross receipts prior to 2013.

This calculator has been developed utilizing data from a variety of studies conducted in the industries listed. This is only an approximation based on a variety of assumptions and should be treated as such. Your company may also qualify for a state benefit. 

Click here for a map of state credits.

How We Can Help?

At Source Advisors, our team of experienced CPAs, attorneys, engineers, and technology experts helps companies save money and create cash flow with R&D tax credits that can help drive overall growth.