Beyond Labs and Tech Startups
Many business owners assume the Research and Development Credit only applies to laboratories or Silicon Valley startups. In reality, the rules are much broader. The IRS looks at whether your company is solving technical problems through a process of experimentation, not whether you wear a lab coat or hold a patent. That means companies in industries often overlooked for R&D are missing opportunities to claim substantial tax savings.
Real-World Examples of Eligible Work
Consider a food manufacturer reformulating recipes to extend shelf life without preservatives. Each trial and adjustment involves technical uncertainty and systematic testing. Or a construction firm experimenting with prefabricated components to improve accuracy and reduce waste. Even precision machine shops that design custom fixtures to reduce vibration on complex parts are performing the kind of iterative work that meets the definition of R&D. Across industries, these problem-solving activities happen every day, but they are rarely recognized as qualifying for the credit.
Why Everyday Innovation Counts
The key is understanding how everyday technical challenges align with the four-part test for R&D eligibility. If your team is developing prototypes, testing variations, documenting results, and making improvements, there is a strong chance those costs qualify. Wages, materials consumed in testing, and certain contractor costs can all be included, meaning the savings can add up quickly.
The Risk of Overlooking R&D
Many companies dismiss these opportunities because they assume their work is “just part of the job.” The reality is that the R&D Credit was designed to reward exactly this type of incremental innovation. By capturing these activities and linking them to costs, your business may unlock credits you did not know were available.
Time to Reevaluate Your Eligibility
If you are in an industry that has never claimed R&D before, now is the time to revisit your eligibility. Strategic Tax Planning can help identify qualifying projects, connect the dots to costs, and ensure your credit is defensible. Contact us at (202) 455-6010 or schedule a confidential consultaiton here.
