Research & Development Tax Credit for the Civil Engineering Industry
The research and development (R&D) tax credit was explicitly designed to stimulate innovation, promote job expansion, increase corporate cash flow opportunities, and maintain the United States’ ability to compete in the global technology marketplace. The engineering vertical has long been a vehicle for innovative growth. However, engineering organizations must continually develop new and improved designs, concepts, and processes to remain competitive, both locally and internationally. Unfortunately, the cost to drive and sustain innovation initiatives can be extensive and prohibitive.
To help minimize expenditures, increase working capital, and accelerate development efforts, the federal and state governments have expanded available R&D tax credits to offer incentives to U.S. civil engineering businesses.
Does Your Civil Engineering Business Qualify for R&D Tax Credits?
The current tax law recognizes that most engineering firms aren’t pioneering new designs. The existing research and development legislation expands beyond revolutionary innovations, acknowledging several standard activities as R&D intensive. Your civil engineering firm could be able to monetize qualified R&D activities.
Civil Engineering Qualified Activities May Include:
- Designing infrastructure utilizing green and solar technologies
- Designing a wastewater treatment plant
- Designing water and sewage systems in complex environments
- Developing solutions to infrastructure challenges
- Developing solutions around potential environmental issues
- Designing roads, bridges, and tunnels
- Developing structural foundation designs for different soil compositions
Let’s say you spent the following costs in your development:
Design Payroll Costs: $500,000
Your Federal R&D tax credit would be: $39,000
You can also go back and amend three (3) open years. Additionally, most states recognize the R&D tax incentive, potentially doubling your benefit, with some allowing organizations to amend up to four (4) years in certain states.
Acena, a specialist in the R&D law, bridges the gap between the qualified activities and the associated costs.