The R&D Tax Credit is intended to help manufacturer’s thrive in a competitive economy. However, many manufacturers miss out on the benefits and advantages of the R&D Tax Credit. If you are a manufacturing business that works to improve an automotive product or process, you don’t want to miss out on this opportunity.
The Research & Experimentation Tax Credit or R&D Tax Credit is a general business tax credit under Internal Revenue Code section 41, for companies that incur research and development (R&D) costs. After several extensions, the R&D Tax Credit was recently made permanent and now provides annual tax savings to many manufacturers without the prospect of the benefit expiring. In addition to the federal credit, many states also offer their own R&D Tax Credit which can add to the potential tax savings.
Manufacturers that bring new and/or improved products to market by making them more efficient, faster and cheaper, are perfect candidates for the credit. Activities that are related to process design and development also make the credit sustainable. Examples of activities that likely qualify for the credit include:
- Developing and improving automotive parts
- Designing manufacturing equipment
- Designing, constructing and testing product prototypes
- Automation of manufacturing processes
- Testing to meet compliance with changing emissions laws and regulations
- Developing cost-effective and efficient manufacturing operations
- New or improved tooling
These are just some of the activities that can qualify your business for the R&D Tax Credit. Warren Averett will do a free assessment to determine if your company is eligible for the R&D Tax Credit. To learn more about the incentives and how to best leverage these opportunities, please contact Floyd Holliman, Warren Averett R&D Practice Leader.
Floyd Holliman, CPA
2500 Acton Road | Birmingham, AL 35243