The craft beer and cider industries are continuing to grow and evolve, and technological advances have spurred changes in the types and quality of products. In addition, research and development (R&D) in canning and bottling methods to preserve freshness, taste, and shelf life have continued to revolutionize the industry. As the industry continues to innovate to keep pace with an increasingly crowded market, companies investing resources in developing the “next new thing” can recoup some of their costs by claiming the R&D Tax Credit.
Employee wages, raw materials and supplies, and third-party contractor costs associated with research and development 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 company or firm operates.
Example activities that qualify:
- Designing, building, and/or implementing custom brewing equipment
- Creating and testing new recipes (e.g. evaluating alternative ingredients) or fermentation techniques to achieve desired flavor/aroma profiles
- Assessing how to mass-produce a new recipe and improving the canning/bottling processes
- Adding automation to enhance quality, consistency, or throughput
- Researching environmentally-friendly or sustainable components for an existing product line
- Evaluating small-batch prototypes and optimizing scale-up processes for commercial production
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- Head / Lead / Master Brewers
- Laboratory Technicians
- Operations Managers
- Packaging Engineers
- Process Improvement Experts
- Product Managers
- QA / QC Personnel