Designing innovative textiles and garments involves significant research and development (R&D). The conceptualization, creation, and testing of new fabrics and the production of prototypes to meet functional specifications are qualifying activities for the R&D Tax Credit. If there are technical issues that your company must overcome with a new design, or there are uncertainties inherent in a design process, there is a strong likelihood your R&D activities can be claimed for significant tax savings.
Employee wages, raw materials and supplies, cloud computing, and third-party contractor costs associated with R&D activities are considered qualified research expenses (QREs). Companies can receive refunds of up to 22% of total QREs through federal and state tax credits, depending on the state in which your business (or third-party contractor) operates.
Examples of qualifying activities:
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Benefits for the R&D Tax Credit vary from state to state. Get an accurate estimate of your potential state tax credit!