Compounding pharmacies are constantly innovating by customizing drug formulations to accommodate the specific needs of individual patients. However, many of them are unaware that all the time they spend developing or improving new medications can qualify for the R&D tax credit.
Common qualified research activities include assessing the active ingredient(s) and excipients, solubility, and the appropriate dosage and route of administration. Companies that conduct research and development (R&D) for new and complex compounded medications can offset costs with the R&D tax credit to reinvest in further growth.
Employee wages, raw materials & supplies, 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 operates.
Examples of qualifying activities:
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
Benefits for the R&D Tax Credit vary from state to state. Get an accurate estimate of your potential state tax credit!