Apparel & Textiles R&D Tax Credits

R&D operations in the apparel and textiles sector can vary greatly. For instance, qualifying activities include designing novel clothes, footwear, accessories, textiles, or fabrics, using new chemical and topical treatments, and embroidery processes. In fact, from textile mills and design studios to production facilities, apparel firms can have QREs at any point in the development chain. For this reason, if your company invests in designing and testing innovative textiles and manufacturing prototypes, there’s a good chance you are eligible for state and federal R&D tax credits.

Apparel & Textiles research and development tax credit can equal 22% of your total QREs. That said, the amount you are entitled to may change depending on the state you conduct your research in.

Qualifying Costs and Activities

All expenditures related to your research, such as third-party contractors, raw materials, and supplies, are considered QREs. In addition, you can use this incentive to cover wages for certain positions like textile and process engineers, technical designers, pre-production and production managers, pattern makers, cutters and sewers, CAD personnel, and C-suite.

To apply for the Apparel & Textiles R&D tax credit, you must invest in some of the following qualifying activities:

• Making test samples or prototypes of new clothing;

• Creating technology-improved screen printing methods;

• Developing new materials and streamlining production techniques to include new fabrics;

• Assessing a fabric’s capacity to fulfill functional criteria;

• Modifying clothing structure to increase quality and durability;

• Introducing unique dye compositions;

• Altering the technical aspects of shoes to enhance their support or usefulness.

Our experts are waiting for your call to start calculating your R&D tax credit in the Apparel & Textiles industry. We can give you a free estimate and help you apply.

FAQs

What kind of companies can apply?

Apparel and Textile companies that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, purchase orders, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.