Nevada doesn’t have a research and development (R&D) tax credit program. Innovative businesses could receive an R&D credit the federal government.
Research and development (R&D) tax credit programs have long incentivized businesses to continue investing in R&D. Nevada doesn’t offer a state R&D credit program, but luckily, one of the R&D tax credit options for Nevada businesses includes the federal R&D tax credit. Keep reading to learn everything you need to know about the federal R&D tax credit program.
What is the Federal R&D Tax Credit Program?
Unfortunately, Nevada doesn’t currently offer an R&D tax credit program for aspirational business owners. That being said, your Nevada business could qualify for an R&D tax credit from the federal government. First introduced in 1981, this credit is an incredible resource for companies large and small. You could be eligible for this credit if your business has:
- Developed a new product/process and/or improved upon existing functionality
- Encountered a level of uncertainty in the development process
- Put into practice a process of experimentation to eliminate uncertainty
- Conducted experimentation that relied on either engineering, biological, physical, or computer science
- Employed all or a portion of your workers within the United States
If you meet these qualifications, you will be able to move on to the next step of identifying your qualified research expenditures (QRE) and getting an estimate of your total credit.
What is QRE?
QRE are specific items that can be used to calculate your R&D credit. You may list these items as QRE:
- The salaries of your full/part-time U.S.-based employees taking part in R&D
- A percentage of any 3rd party U.S.-based contractors hired for R&D
- Disposable supplies purchased for your company’s R&D
While you will need to complete a full R&D study to find the total amount of your credit, you can use a free R&D tax credit calculator for an estimate. Typically, business owners can expect to receive a credit that reflects 7-10% of their QRE. This credit can then reduce your tax burden.
How the Credit Reduces Your Tax Burden
Here is a detailed breakdown of how a federal R&D tax credit can reduce your company’s tax burden:
- Payroll Tax. Companies that are no more than five years old and are pre-revenue or bringing in less than $5 million in revenue can use a federal R&D credit to offset the social security portion of the payroll tax.
- Income Tax. Companies that bring in more than $5 million in revenue can use the credit to directly reduce the income portion of the business tax.
- Carry Forward. A company can choose to carry its R&D tax credit forward by 20 years.
As you can see, this tax credit is an invaluable resource that can empower your business to flourish.
What You Need to Know About R&D Tax Credit Options for Nevada Businesses
Creative Nevada business owners can’t claim an R&D tax credit from their home state; however, they can claim an R&D tax credit from the federal government if their business qualifies. If your business meets federal R&D tax credit program regulations, you could receive a credit that’s 7-10% of your QRE. Don’t wait get the credit you’ve earn. Contact us at Bowers R&D today.