Tool & die manufacturers specialize in customized parts and tooling for their clients, and direct significant resources toward research and development (R&D). If your company designs novel prototypes, uses modeling technology, or optimizes manufacturing methods, it may be eligible for significant tax savings. Companies can claim the R&D Tax Credit to recoup certain business expenses and reinvest in their workforce and growth strategy.
Employee wages, raw materials and supplies, and third-party contractor costs associated with R&D 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:
- Using computer-aided design (CAD) to design custom components
- Developing novel jigs, dies, tooling, and/or fixtures
- Conducting validation testing on prototypes and first articles
- Programming Computer Numerically Controlled (CNC) or Programmable Logic Controller (PLC) system software
- Designing and improving new products and processes
- Improving production processes to increase throughput
Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?
- CAD Personnel
- CNC Machinists
- Industrial Designers
- Manufacturing Engineers
- Mechanical Engineers
- Operations Managers
- Tooling Engineers
- Quality Assurance (QA) Personnel