R&D Tax Credits for the Manufacturing Industry
Annually, the manufacturing industry claims $47.4 billion in Research and Development (R&D) credits. The credits provide companies dollar-for-dollar cash savings each year for performing activities related to the development of new or improved products or processes.
Numerous manufacturing companies don’t realize they can qualify for this credit and can yield a sizeable amount of research credits even if they aren’t developing new products or engineering new manufacturing products. If your company is attempting to improve or develop processes, products or software, you may be eligible for R&D tax credits.
What Manufacturing Activities Qualify for R&D Tax Credits?
Your manufacturing company potentially qualifies for the credit if you are doing the following activities:
If you are developing:
- Prototypes using computer-aided design (CAD) to meet specifications of customers
- New or improved quality assurance testing processes to increase product reliability
- New or improved processes or techniques to increase overall performance
- Processes or products that meet state or federal regulatory requirements
- Robotics and automated technology
If you are designing:
- Building and testing first article prototypes
- Custom tooling and fixtures
- A manual process into an automated one through software development
If you are improving:
- Durability, strength and service life
- Speeds and feeds while ensuring quality and integrity of the part
- Processes including filling and sealing of products, packaging, die design techniques and minimizing environmental impact.
What Manufacturing Jobs Qualify?
Your manufacturing company may qualify for the credit if you employ the following job titles:
- Assembly Technician
- Computer-Aided Design (CAD) Technician
- Computer Numerically Controlled (CNC) Operator
- Designer
- Director of Operations
- Drafter
- Engineers: Design, Process, Product, Project, Manufacturing, Software and Test
- Fabricator
- Machinist
- Manufacturing Manager
- Plant Operator
- Production Manager
- Quality Assurance (QA) Manager
If your company is outsourcing any of the above job titles such as product designers, engineering services, fabrication specialists or testing services, you may still qualify for an R&D tax credit. Manufacturing companies should not attempt to claim the credit without professional help. Contact your advisor at BSSF if you have any questions.