
Qualified Research Expenses (QREs)
The IRS allows several categories of Qualified Research Expenses (QREs):
Compliance and Documentation
Following the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025, §174 now allows immediate expensing of domestic research expenses for tax years beginning on or after January 1, 2025. Taxpayers may also elect optional amortization under new §174A. Foreign research expenses must still be amortized over 15 years. This is separate from the §41 credit but impacts overall tax planning.
Documentation requirements remain unchanged. Maintain clear records of:
Frequently Asked Questions
Yes — companies building new aircraft, improving systems, or running aerospace experiments (structural, control, thermal, etc.) can qualify if the work involves uncertainty and testing.
Wages of engineering and test staff, materials used in prototypes, R&D software, and qualifying third-party test services.
Standard production, routine QA, admin tasks, or deploying existing off-the-shelf parts without testing or redesign.
Savings vary by size and scope. Some firms claim credits equal to 10%–15% of qualified expenses (federal only), and more when state credits apply.
Track time spent on eligible projects, retain design/test records, log all changes and rationale, and store simulation/prototype outcomes — including failures.
Yes — if they’re creating or improving launch vehicles, communication systems, orbital robotics, or in-space operations under technical uncertainty, and are documenting the research effort.
Engineering/test personnel wages, consumed supplies (prototypes, shielding), relevant software, and outside research contracts — as long as your company retains risk and technical control.
Routine launches or ops without experimentation, using commercial hardware with no change/testing, or reimbursed government research with no rights or risk.
Well-documented firms often recover 10% to 15% of their qualified expenses — and more when layering in state credits
Focus on simulation vs. field test logs, version control, subsystem test reports, time tracking by project, and documentation of rework/redesign based on failed criteria or test outcomes.
Yes — if they’re developing new satellite buses, payloads, communications systems, or network software under conditions of technical uncertainty and experimentation.
Engineer and test team wages, prototyping materials, R&D modeling software, and outside lab testing — if directly tied to your development efforts
Standard satellite manufacturing without redesign, non-technical admin or business tasks, or deploying known commercial hardware without testing/modification.
Federal credits often return 10%–15% of qualified research expenses. With proper documentation and state incentives, total benefit can be even higher.
Logs of orbital simulations, payload integration trials, subsystem test results, engineering rework decisions, and time allocation records are key for claim defense.
Yes — if they develop new propulsion systems, reusable launch technology, hypersonic vehicles or conduct experimental tests under technical uncertainty.
Engineer/test staff wages, prototype supplies, simulation software, contract research tied to experimentation.
Routine production/maintenance, use of standard engines without innovation/testing, purely administrative tasks.
Savings vary by project size and scope, but many companies in this field claim sizable credits when properly documented.
Maintain logs of test results, simulation data, time‑sheets, design‑change history and proof of experimentation and uncertainty.
Yes — companies that develop new or improved munitions systems, interceptors, weapons platforms or manufacturing methods can qualify when structured correctly.
Wages of engineering/test personnel, prototyping supplies, simulation/model software, contract research tied to experimentation.
Routine production of standard weapons or ammo without innovation/testing, purely administrative tasks, or use of off‑the‑shelf systems without modification/testing.
Savings vary by company size and scope, but many firms claim significant credits when R&D is structured and documented properly.
Use detailed logs of prototypes, live‑fire tests, simulation results, time‑sheets, iteration records and proof of experimentation and uncertainty.
Yes. Many craft and small‑batch brewers and cider producers innovate with new recipes, fermentation/yeast techniques, packaging formats and sustainable operations—and these can qualify under the R&D tax credit rules.
Wages of staff involved in experimental activities; supplies used in testing new formulations or equipment; software used in modelling or controlling processes; and a portion of contractor expenses for external trial work.
Eligibility is not limited by size. Whether you’re a nano or micro‑brewery, a regional craft producer or a cider‑house conducting bona fide experimentation in process, product, packaging or sustainability you may qualify.
Standard recipe production without variation; routine tasting room operations; marketing campaigns; routine packaging without testing; applying fully proven methods without experimentation.
Savings vary depending on size, number of trials, level of experimentation and documentation. Industry benchmarks suggest that beverage manufacturers may raise tax credits for roughly ~18% of their R&D‑related costs. Even smaller operations conducting a handful of development batches may realise thousands of dollars in credits.
Keep detailed records of trial designs, batch logs, sensory/stability results, equipment logs, time sheet allocations, ingredient logs and process variations. These records support your claim under the IRS four‑part test (permitted purpose, technical uncertainty, experimentation, technological in nature).
Yes. Spirits producers that develop new recipes, ageing or finishing techniques, separation/distillation processes, packaging innovations, or sustainability projects may qualify.
Wages of staff working on experiments, supplies for trial batches and packaging prototypes, software used in modelling/analytics, and a portion of contract research costs.
Small craft distilleries through larger regional operations may be eligible, as long as they are engaged in experimentation of products, processes, packaging or operations.
Routine production without experimentation, standard bottling runs, marketing or sales efforts, equipment installation without experimentation.
Savings vary by scale, trial volume and documentation. Industry sources indicate beverage companies may qualify for around ~18% of their eligible expenses.
Keep batch logs, process variation records, still/fermentation data, barrel logs, packaging test logs, employee time sheets, contractor invoices and software usage logs that tie to research projects.
Yes. Farmers and agribusinesses can qualify if they engage in systematic testing or trials that resolve technical uncertainty, not routine operations.
Wages, supplies, cloud software, and a portion of contract research directly related to qualified R&D activities.
Common row crops such as corn, wheat, soybeans, and cotton can qualify when growers test new methods or technologies.
Routine farming, post‑discovery production, and non‑technical tasks such as sales or general management.
Savings vary by farm size and scope of activities. Industry reports suggest many row crop operations see $50,000 to $200,000 in annual credits when research activities are properly documented.
Maintain side‑by‑side trial data, soil and yield records, equipment logs, and employee time allocations to support claims under IRS audit guidelines.
Next Steps
Use our calculator to estimate your potential federal and state benefits
Schedule a consultation to structure your row crop research activities
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Software & Technology
With just a little info, our Strike Experts can help you start your R&D tax credit journey.
Financial technology services, or FinTech, is an emerging industry that spans personal finance, consumer banking, wealth management, lending, and stock trading. As the demand for transparency and efficiency in finance grows, many companies provide their clients and investors with secure mobile apps and platforms. Your FinTech company may be eligible to claim the Research and Development (R&D) Tax Credit and increase its bottom line through significant reductions in federal and state tax liability.
Employee wages, supplies, cloud computer rental, 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:
- Designing new data modeling applications
- Creating novel financial platforms or user-friendly interfaces
- Refining data mining techniques and conducting statistical analysis
- Testing and optimizing fraud detection systems
- Improving cybersecurity measures for existing applications
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- Compliance Managers
- Cybersecurity Experts
- Data Scientists
- Financial Analysts
- Full-Stack Software Engineers
- Machine Learning Architects
- Quantitative Analysts
- Software Developers
- User Interface/User Experience (UI/UX) Developers
Use our R&D Tax Calculator to estimate your potential benefit, and partner with Strike to claim your tax benefits with no up-front costs. Contact one of our experts today.
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