While engineering and design activities account for the majority of R&D tax credits within the Architecture, Engineering, and Construction (AEC) sector, construction companies can claim these credits for a broad range of activities undertaken regularly in relation to new building projects. Similarly, firms within the Mechanical, Electrical, and Plumbing (MEP) engineering realm also qualify, even if their focus is solely on specific systems within larger construction projects.
Indeed, every engineering trade harbors technical uncertainty – a clear indication of research activity – especially when it comes to designing custom systems for both new and existing structures. Various activities can qualify for the credit: design reviews for constructability, development of novel construction processes, experimentation with new raw materials, as well as continuous assessments of alternatives throughout the lifecycle of construction projects. The R&D tax credit thus offers valuable opportunities for cost recovery and incentivizes innovative advancements within the AEC sector.
In addition to internal labor, qualified research expenses (QREs) often include the costs associated with hiring outside consultants to perform these activities.
A typical construction project has several stages. Research activities are usually more prevalent in the early stages but may occur later as well. Construction stages include:
Total combined federal and state tax credits for this $115 million MEP company average about $440,000 annually.
This full-service construction firm serves public and private sector clients throughout the United States. Their personnel are highly skilled in the disciplines of engineering, architecture and construction to develop innovative approaches to every project.
The R&D tax credit can help a wide variety of businesses offset and reduce their income tax liability, in addition to providing many other benefits. 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 then help drive overall growth.