How Manufacturers Can Use the R&D Tax Credit

Bottles of sunflower oil on an assembly lineThere’s a 4-part test.

By Barry J. Friedman, CPA

Many manufacturing companies fail to take advantage of the generous research and development (R&D) tax credit simply because they don’t have staff working in a lab. The Internal Revenue Service’s (IRS) definition of R&D is codified at Internal Revenue Code Section 41 and its related regulations – and it may not be exactly what you think it is.

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From 2018 to 2027, the estimated value of R&D tax credits to be claimed by U.S. companies is estimated at $163 billion, with $148 billion of that going to corporations.