The high demand for quality dairy products in the U.S. requires significant investments in research and development (R&D) in the dairy processing industry. If your processing business experiments with pasteurization, tests manufacturing equipment, or improves packaging and fulfillment speeds, it may be eligible to claim the R&D Tax Credit. Federal and state credits can generate immense tax savings that can be reinvested in your company to enable additional growth and innovation.
Employee wages, raw materials and supplies, cloud computing expenses, 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 business operates.
Examples of qualifying activities:
- Developing novel pasteurization processes to increase shelf-life and prevent disease / health concerns
- Experimenting with cattle tracking systems (e.g. chips) for reproduction and grazing purposes
- Increasing dairy herd yield through supplement formulations and environmental improvements (e.g. grass-fed, no growth hormones, ample foraging space, nutraceuticals)
- Improving bottling technology to increase efficiency
- Implementing process automation capabilities to increase productivity
- Developing novel equipment to improve processing efficiency (separators, evaporators, etc.)
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- Equipment Technicians
- Food Scientists
- Manufacturing Engineers
- Nutrition Consultants
- Process Engineers
- Production Managers
- Quality Assurance (QA) Personnel