Many companies have long been aware of the Research and Development (R&D) tax credits that exist within the Internal Revenue Code (IRC). However, the R&D credit remains one of the most misunderstood and underutilized tax credits available today. Traditional misconceptions are that only the largest U.S companies can benefit from these credits or that only “high-tech” industries who conduct their operations in a laboratory or testing facility would qualify.
The reality is that many industries, including the construction industry, conduct activities every day that could qualify them to claim the benefits the R&D credit. Some of the best candidates include architectural and engineering firms, mechanical and electrical contractors, and even general contractors. It’s important to know that R&D does not just apply to inventions, but rather encompasses the design, development or improvement of products, processes, techniques, formulas, or software. A broad range of common construction industry practices will qualify for the credit under the IRC’s definition of R&D.
Construction industry architects, engineers, designers, and machinists often spend a substantial portion of their time developing new and innovative designs and processes in an effort to remain competitive. This continuous advancement of technologies provides plenty of opportunities for construction companies to take advantage of these tax incentives.
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