Take Advantage of Technology with the R&D Tax Credit
Juxtaposed against the rest of the world, the United States appears to be mounting as an economic and techno-industrial power. In particular, close cooperation between the US Congress, industrial manufacturers, university research and the military establishment have contributed to the United States emergence as one of the most technologically advanced nations in the world.
In the U.S. Chamber of Commerce Foundation’s Enterprising States: States Innovate report released in October 2015, findings revealed that states that invest in the STEM (Science, Technology, Engineering, Mathematics) economy are likeliest to thrive. The report outcomes affirm that the future of our states—and their capability to combat major economic, social and environmental challenges — rests fundamentally on how they utilise and benefit from technology.
Undeniably, technology aids in reshaping established fields of medicine, manufacturing, energy and business services, and shifting the spotlight from Silicon Valley to other corridors of home-grown innovation. However, how can individual firm’s leverage this technologically rich ecosystem to benefit their business?
One way of utilizing and enhancing technology within a firm is by investing in R&D. Ultimately, R&D generally results in the production of technology that can boost economic growth and competitive advantage. As the Enterprising States: States Innovate study highlighted, the prosperity of America’s states rests largely on how they adapt to and take advantage of changes in technology. Given the benefits of a technological economy outlined in the previous paragraphs, it is clear to see that investing in R&D is a way of spurring economic growth and taking advantage of the opportunities technology has made available. From wearable technology to 3D printing, the US is indeed involved in a substantial amount high-technology research and development (R&D).
In relation to this, companies engaged in R&D related to technology will most likely be eligible for the R&D tax credit. The R&D tax credits are tax incentives for performing qualified research (not necessarily successful) in the US, resulting in a credit to a tax return. In order to qualify for the credit, a firm’s research has to be technological in nature – thus, a firm cannot research the arts or humanities and claim an R&D credit. Rather, a firm must rely on physical science, biology, engineering and/or computer science. If you want to learn more about R&D tax credits, contact a Texas Tax Credit specialist today for further information.