The R&D tax credit is a permanent federal incentive that rewards investment in innovation with a direct reduction in tax liability. Not a deduction. A credit. Available to companies of every size, across virtually every industry.
Engineering-trained specialists. Audit-defensible documentation. Every engagement.
The R&D tax credit (IRC §41) is a permanent federal incentive that directly reduces your tax bill, dollar for dollar. A tax deduction only reduces your taxable income. The difference in value is significant.
Qualifying businesses receive a dollar-for-dollar reduction in their income tax liability. Not merely a deduction. A direct credit against taxes owed.
Credits can offset both income tax and, for qualifying small businesses, payroll (FICA) taxes. Federal and most state credits may be claimed simultaneously. Unused credits carry forward for up to 20 years.
The credit is calculated on your qualifying research expenses above a base amount. Your company's specific credit depends on your R&D history and which calculation method applies. aecre evaluates both methods and applies whichever produces the higher result.
Nearly 40 states offer additional R&D credits that stack on top of the federal credit. State rates typically add 5% to 25% on top of the values shown above.
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Answer the quick check questions to see if your company qualifies.
Nearly 40 states offer R&D credits that stack on top of the federal credit. Rates and structures vary widely. California's credit is structured differently from Texas's, which is structured differently from New York's. aecre identifies and claims all applicable state credits as part of every engagement. For multi-state operators, this often doubles the value of the study.
Most R&D credit providers are tax professionals who subcontract the engineering work. aecre is built the other way: engineering-trained specialists who understand how technical problems actually get solved, producing documentation that meets IRS examination standards from day one.
We understand how technical problems get solved. Our documentation reflects how the work actually happens, not a questionnaire.
Technical narratives, QRE documentation, and contemporaneous records are structured to meet examination standards on every study.
Partners handle every engagement. Senior attention from scoping through filing. You are never routed to junior analysts.
Most companies that qualify do not think of their daily work as "R&D." But if your team is working to improve how something functions, figuring out the best way to get something to work, or trying new approaches because the old ones were not good enough, there is a strong chance that work qualifies right now.
The R&D tax credit does not require inventing something new to the world. If the solution is new to your company and required genuine experimentation to find, it qualifies. A rancher trialing a new grazing protocol, a food manufacturer reformulating a product, or a medical practice developing a novel treatment approach can all qualify even if other companies have done similar work. The uncertainty is about whether it works for you, not whether anyone has ever done it.
The work must be intended to develop or improve the functionality, performance, reliability, or quality of a product, process, formula, technique, or system. The improvement does not need to be commercially deployed or even successful. Failed experiments count.
A manufacturer develops a new metal alloy for structural components to improve tensile strength. The first three prototypes fail. The failed trials still qualify because the intent was to improve the product.
This prong applies equally to a food company improving a recipe, a rancher improving a grazing system, or a medical practice developing a better treatment protocol.
The work must rely on principles of engineering, computer science, physics, chemistry, biology, agronomy, or other physical or life sciences. Business judgment, marketing analysis, and financial modeling do not satisfy this prong. Technical judgment does.
An operator tests enhanced recovery techniques in a low-permeability formation using reservoir simulation to model subsurface fluid flow. The work relies on petroleum engineering and physics, satisfying the requirement.
This prong is met by any work grounded in a recognized scientific discipline. Agronomy, food science, materials science, and clinical science all qualify.
The work must seek to resolve uncertainty about whether or how a capability, method, or design can be achieved. If the answer was obvious from the start without technical investigation, it does not qualify. But if your team was not sure whether their approach would work, that uncertainty is the signal.
A software company builds a real-time recommendation engine. At project start, the team cannot determine whether a neural network or a gradient-boosted model will meet the latency and accuracy requirements simultaneously.
For agriculture, the uncertainty might be: will this fertilizer protocol outperform the current approach in these soil conditions? For food manufacturing: will this reformulation maintain texture when the preservative is removed?
Your team must evaluate one or more alternatives through testing, trialing, modeling, iteration, or other systematic methods. It does not need to be a formal laboratory process. Trialing different approaches and evaluating results qualifies.
A grower trials five different nutrient application protocols across controlled plots to determine which produces the best yield and soil health outcomes in drought conditions. The systematic comparison of alternatives qualifies.
Most companies are already doing this without calling it experimentation. If your team tests different approaches, compares results, and adjusts based on what they learn, you are running a process of experimentation.
Common QRE distributions across our completed studies. Your specific composition depends on industry, scope, and contractor mix.
Qualifying small businesses can apply up to $500,000 per year in R&D tax credits directly against the employer share of Social Security (FICA) taxes. Real cash flow in the same quarter the election is made.
The election is made on Form 6765 and applied quarterly against payroll deposits. No income tax liability required.
Growing past the $5,000,000 threshold? Unused credits carry forward for up to 20 years. Credits built during early-stage years apply against income tax as the company scales.
R&D tax credits do not expire when your company is unprofitable. They accumulate into a credit bank that deploys the moment profitability arrives.
For companies that have been investing in qualifying activities for years without claiming credits, the prior-year opportunity is often larger than the current-year credit.
Book a Free AssessmentWe assess your qualifying activities, estimate your credit value across federal and state programs, and give you a clear picture of what IRC §41 is worth for your company, before you commit to anything.
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