R&D Tax Credit (§41)
A dollar-for-dollar federal credit for activities that develop or improve products, processes, software, or formulas — often missed by manufacturers, software, and engineering shops.
The 4-Part Test
An activity qualifies if it (1) develops or improves a product/process/software/formula, (2) is technological in nature, (3) eliminates uncertainty, and (4) involves a process of experimentation. You don't need a lab — building custom software for internal use, improving a manufacturing line, or formulating a new product all qualify.
Who actually claims it
Software companies (custom dev), manufacturers (process improvements), food & beverage (formulations), engineering and architecture firms (design). Startups with little/no income tax can apply up to $500k against payroll taxes.
Documentation
Time-tracking, project narratives, and contemporaneous records win audits. Engage a specialty firm — your generalist Tax Professional usually doesn't capture half the qualifying costs.
Educational only — not tax, legal, or investment advice. Talk through your specific situation with a qualified advisor.