There is a widespread misconception in the manufacturing industry that production of products or improvements to the processes used to manufacture those goods do not qualify as research and development (R&D). But, if your company improves upon an existing process, overcomes technical obstacles to solve a problem, or is involved in creating new products or processes, there is a strong likelihood that your costs can be offset by the R&D Tax Credit. In addition to the federal credit, many states offer tax breaks. Pre-revenue companies and start-ups with less than five years of revenue can use the federal R&D tax credits to offset future payroll taxes.
The following manufacturing industries have claimed significant R&D tax credits and received millions in capital to reinvest in their workforce, infrastructure, and continued innovation:
Apparel & Textiles
Automotive & OEM
Building Systems Controls & Automation
Chemicals
Electronics
Food & Consumer Packaged Goods
Job Shops - Precision Manufacturing
Metals & Alloys
Oil & Gas/Plastics
Semiconductor-Electronics
Shipbuilding & Marine Manufacturing
Tool & Die
Example activities that qualify:
- Designing and evaluating alternative processes to improve cost effectiveness and enhance throughput
- Prototype development and testing
- Evaluating new materials to impart improved functionality or performance
- Creating novel equipment involved in a particular process
- Developing new, more environmentally-friendly products
- Designing and implementing lean manufacturing processes
- Computer Aided Design (CAD) and 3D modeling
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- C-Suite
- Chemical Engineers
- Designers
- Electrical Engineers
- General / Plant Managers
- Industrial Engineers
- IT Specialists
- Mechanical Engineers
- Operations / Production Managers
- Process Engineers
- Quality Control Engineers
- Software Engineers
Unsure of whether your manufacturing processes or product development qualifies? The innovations your company has been working on may be eligible for significant tax breaks. STRIKE Advisory, LLC employs tax experts with years of experience in R&D tax credits. At STRIKE, we work on a success-based fee structure enabling businesses in the manufacturing industry to claim R&D credits/refunds without any out-of-pocket costs. We offer complete audit protection and a money-back guarantee. Use our R&D Tax Calculator to estimate your potential benefit, and partner with STRIKE to claim your tax credits with no up-front costs. Contact one of our experts today.
The R&D Tax Credit was created to incentivize companies across multiple industries to keep high-tech jobs in the United States. Companies can claim employee wages, supplies & raw materials, computer rental costs, and third-party contractor expenditures incurred throughout the R&D process. Current law permits companies to amend prior year tax returns (going back three years), offering additional financial benefits from tax refunds. If you cannot use the R&D credits immediately, the IRS allows taxpayers to carry credits forward up to 20 years.
Journal articles linked to page:
Manufacturing Expenses that Qualify for the R&D Tax Credit
Four Reasons Contract Manufacturers Should Be Claiming the R&D Tax Credit
