Stay ahead in the frozen foods market. Frozen‑foods manufacturers across the U.S. are constantly developing new consumer offerings (plant‑based frozen entrees, healthier snacks, “clean‑label” freezer items), refining freezing technologies (cryogenic blast, air‑blast, IQF), novel packaging/watch‑handling systems and shelf‑life innovations — many of these activities qualify for the federal R&D Tax Credit under IRC §41, as well as state credits.
- Freezing & Cryogenic Process Innovation Running trials with cryogenic and air‑blast freezing to test ice‑crystal size, texture retention, energy consumption, and throughput.
- Formulation & Clean‑Label Product Development Creating reduced‑sodium frozen meals, gluten‑free or allergen‑free frozen entrees, plant‑based frozen sides that maintain taste/texture post‑freeze/thaw, and testing multiple recipe iterations.
- Packaging & Cold‑Chain Handling Innovation Experimenting with high‑barrier freezer‑stable pouches, vacuum/modified‑atmosphere frozen packaging, rapid‑cooling conveyors, freezer‑tolerant sensors/tracking to maintain quality from line to freezer to consumer.
- Automation, Throughput & Energy Efficiency Improving conveyor layouts, robotic handling in freezer/move‑to‑freeze zones, sensor systems for ice build‑up, scaling pilot runs to full lines while retaining product quality, reducing energy use per lb of output.
- Sustainability & Waste Reduction Trialling thinner packaging films that still meet freezer‑durability, reconfigured freezer layouts to reduce dwell time, optimisation of thaw/pack cycles to reduce scrap, recycling of cooling gases or heat‑recovery systems.
What qualifies as R&D in Frozen Foods?
To qualify, your frozen‑foods activities must:
- Aim at a permitted purpose such as a new or improved frozen product (e.g., reduced‑salt frozen meal, plant‑based entrée), a novel freezing or packaging process (e.g., cryogenic IQF, ultra‑fast chill), or packaging/transportation technique to handle freezer‑distribution challenges.
- Address technical uncertainty — for example: “Will the new air‑blast freezer reduce ice‑crystal formation sufficiently to preserve texture under −10 °F for 12 months?”, “Can new packaging maintain crispness of vegetables after thawing?”, “Can we formulate a frozen entrée with clean label and maintain target shelf life under variable cold‑chain conditions?”
- Use a process of experimentation — lab/bench tests, pilot‑line freezing trials, packaging line trials, shelf‑life comparison studies, alternative method/material evaluations.
- Be technological in nature, grounded in food science (freezing kinetics, crystallisation), mechanical/thermal engineering (freezing equipment, blast air systems), packaging materials and barrier engineering, or automation of freezing/handling systems.
Qualified Research Expenses (QREs)
Roles commonly involved in qualifying activities
- Food scientists focusing on frozen product formulation
- Process and mechanical engineers working on freezing equipment/throughput
- Packaging/material engineers specialising in freezer‑stable films
- Automation/control engineers handling frozen‑line integration, sensor/robotic systems
- QA/R&D technicians running shelf‑life and freeze/thaw tests
- External labs or packaging vendors conducting material tests or process trials
What does not qualify
- Routine frozen‑food production without experimentation or process change (e.g., repeating existing product/process each run).
- General administrative, marketing or sales functions.
- Applying an existing freezing/packaging method without addressing technical uncertainty or making improvements.
- Facility expansion or major equipment acquisition not tied to an R&D experiment or process trial.
Compliance and Documentation
§174 Update
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.
Frozen‑foods operations should document their R&D by capturing:
- Hypotheses of technical uncertainty (e.g., “Will new freezing method reduce ice‑crystal formation by X% under −5 °F for 10 months?”)
- Pilot‑line/freezer layouts, test runs, energy usage data, product quality/texture test results, yield/scrap data
- Time‑tracking for R&D staff and supporting personnel, payroll records tied to trial runs
- Material test reports (packaging film durability, freezer sensor data), version logs of conveyor/line layouts
- Project retrospective summaries showing alternative methods considered, outcomes achieved, and decision rationale
Frequently Asked Questions
Yes — if your operation is conducting research or experimentation into new frozen‑food products, freezing/packaging technologies, cold‑chain handling or other technical improvements rather than routine production.
Wages of personnel conducting R&D/trials, supplies and materials used in experimentation (packaging, raw materials, sensors), software for modelling/analysis, and third‑party contractor/lab service costs tied to the trials.
Examples include: developing a new plant‑based frozen entrée, testing a new cryogenic freezer or alternate freezing method, implementing vacuum‑freeze packaging for improved texture retention, redesigning conveyor/freezer integration to improve throughput, reducing waste in freezer zones or improving sustainability.
Routine production or scaling of established processes without experimentation, standard packaging line change‑overs without technical uncertainty, or non‑technical tasks such as marketing, sales or general administration.
Maintain detailed trial plans and hypotheses, test logs showing freezing cycles, results of texture/yield/ice‑crystal analysis, version logs of line/equipment changes, time‑tracking of R&D staff, material test results, and summaries showing how alternatives were evaluated and experiments conducted.
Savings vary by size and scope of innovation, but many firms secure credits around ~20‑30% of their qualified research expenses when activities are properly documented and claimed.
Next Steps
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