According to the American Auto Council, automakers and their suppliers are the world's third largest investor in research and development (R&D). In fact, in 2018, automakers spent more than $125 billion globally on R&D. OEMs are constantly innovating: creating new products that satisfy consumer interests, integrate the required functionality, and work in tandem with existing technologies. The costs of these substantial investments can be recouped, in part, through the R&D Tax Credit.
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!