Aerospace & Defense R&D Tax Credits

Research and development are a big part of the aerospace and defense industries, which assists contractors in these areas to devise unique products and cutting-edge prototypes. Continual innovation and testing are necessary for these two industries, making them great candidates for significant tax benefits through the R&D tax credit. Aside from the federal credit, many states also provide tax advantages. Companies in their early stages of development and start-ups with fewer than five years in business can utilize federal R&D tax credits to offset payroll taxes.

Certain industries within Aerospace and Defense have been granted R&D tax credits in substantial sums to reinvest in their personnel, applied research, and infrastructure. They include aviation, aerospace engineering, satellite technology, government contractors, jet propulsion/rocketry, space exploration, firearms, ammunition, and missile defense. There are many options available to claim an R&D tax credit for contractors providing these services as well.

R&D Expenditures in Aerospace and Defense

Examples of acceptable industry activities include:

• designing (or enhancing) components, coatings, surface treatments, unmanned aerial vehicles, and aircraft designs

• producing, evaluating, manufacturing, and certifying first products and prototypes

• constructing propulsion mechanisms, such as electric propulsion

• implementing automating procedures and creating robotics systems

• developing new defensive ammunition and gear for defense systems

• developing autonomous systems

• the advancement of missile navigation systems

• building cutting-edge communication infrastructure

• designing innovative command and control software

Do you use outside contractors like data specialists, operations technicians, product managers, systems architects or engineers and RF, materials, electrical, and aeronautical engineers? R&D tax credits cover the expenses of getting third-party workers involved in your R&D process.

We Are Here to Help

Not sure if your research and development (R&D) efforts in aerospace or defense count? It doesn’t matter if you run a small or large company or if you work for the government or not, there might be considerable tax advantages available for the technologies your business has been developing. Our experts have years of experience in R&D tax credits and can help guide you through the process.

Our success-based pricing structure enables companies in the aerospace and military sectors to collect R&D credits without having to pay any upfront fees. To calculate your potential gain, use our R&D tax calculator. Work with us to claim your credits without upfront expenses.

The R&D tax credit was established to encourage businesses from a variety of sectors to maintain scientific and technological jobs in the United States. Companies may deduct expenses for staff salaries, supplies and raw materials, computer rentals, and outside contractors incurred throughout the R&D process. By amending past year’s tax filings (going back three years), businesses are able to receive additional financial benefits from tax refunds under existing regulations. The IRS permits taxpayers to carry credits forward for up to twenty years if they are unable to use the R&D credits right away.

Why You Should Consider Aerospace & Defense R&D Tax Credits

• The R&D credit can help you recoup up to 10% of your R&D spend each year, which can be used to reinvest in your business

• Average yearly federal credit of $225,000 for a company in robotics engineering with 25 personnel.

• The typical qualifying expense for a federal military contractor is 47%.