In the face of a rapidly changing regulatory landscape, several experts are highlighting tax credits that are now available to surprising, non-traditional industries.
-- According to official IRS sources, 2025 spelled the end for a number of tax credits and other Covid-era aid programs, including a number of relief programs devised under the American Rescue Plan Act of 2021. However, as some experts are now highlighting, business could still stand to benefit significantly under other programs in 2025 and beyond.
Online resource Federal Tax Credits ORG is shining a light on the Federal R&D Tax Credit as a source of relief for a wide range of industries. The federal tax experts at Cherry Bekaert, for example, recently stated that this R&D credit is likely available to many more businesses than have claimed it in the past, due in large part to misconceptions about the credit and who qualifies for it.
Cherry Bekaert went on to explain that recent changes to the Treasury Department’s regulations have broadened the guidelines for the credit to over 40 industries. Under these new guidelines, an average of 10-20% of Qualified Research Expenditures (QREs) could be eligible for deduction under the credit.
As financial advisory group CohnReznick detailed in a recently published report, the main source of hesitancy among businesses comes from a narrow perceived definition of what qualifies as R&D as far as the credit is concerned. As they explain, the credit is available to companies far outside of the traditional biotech spaces, and may indeed be available to large manufacturing companies and to those in heavy industry sectors more broadly.
For example, according to their reporting, any activity involving the development or implementation of a new material or a material in a novel context qualifies under the credit’s guidelines for deduction. Likewise, costs associated with equipment customization, prototyping, and model development could also meet the criteria.
In the updated documentation, the IRS outlines a so-called “4-part test” that businesses must pass in order to qualify for the credit. Source Advisors, a CPA company, explains that, in simple terms, businesses must demonstrate an innovative approach to the problem at hand, a demonstrable effort must be made to solve said problem through iteration and improvement, the activity must involve a high threshold of engineering or inventiveness, and the research process must be tested and sufficiently documented throughout.
Cherry Bekaert shared one case study in which a business whose operations met these 4 standards was able to reduce their research cost by over $1 million, solely by claiming the R&D tax credit. They hope that by raising awareness of these expanded guidelines, others will be able to achieve similar results.
Contact Info:
Name: Paul Kohn
Email: Send Email
Organization: Federal Tax Credits ORG
Address: 1315 W E Pl., La Center, WA 98629, United States
Website: https://federaltaxcredits.org/
Source: PressCable
Release ID: 89164517
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