Aviation R&D Tax Credits

Aviation is evolving fast to accommodate all the changes that the modern way of thinking demands. For instance, passenger safety in crowded airspace is a number one concern. Furthermore, the global aviation industry is responsible for about 2.1% of all human-induced CO2 emissions. For this reason, it is under pressure to reduce its carbon footprint as much as possible, especially after the recent public outrage over private jet emissions.

As a result, aviation companies invest heavily in R&D activities to improve their services and meet these standards, which tends to be costly. To help companies shoulder the financial burden, the government has introduced the Aviation research and development tax credit at the federal and state levels.

Aviation R&D Tax Credit Explained

If your company conducts research in aviation-related design, engineering, manufacturing, and software, you are eligible for the Aviation R&D tax credit. If you apply and get approved, you’ll receive a refund of up to 22% of your total expenses. The exact percentage will depend on the state your business is located in.

Keep in mind that the R&D tax credit in the Aviation industry applies only to qualified research expenses (QREs). In other words, you can’t get a refund for all your expenses, but only for those that fall under this category.

Qualifying Costs and Activities

When it comes to expenditures that belong to the QRE category, those include employee wages, cloud computer rental, supplies, raw materials, and costs of third-party contractors. With the R&D tax credit refund, you could cover several job titles such as architects, electrical and mechanical engineers, cyber security personnel, software developers, materials scientists, flight control engineers, aerodynamics engineers, aircraft performance engineers, and design engineers.

You might be eligible for the Aviation R&D tax credit if your company performs the following activities:

• Developing electric vertical take-off and landing (eVTOL) aircraft;

• Creating zero-emission propulsion systems;

• Improving cabin design;

• Performing tests on various runway materials;

• Improving air safety;

• Enhancing airport construction and design;

• Designing prototypes and 3D models;

• Enhancing communication systems and telemetry;

• Testing new composite materials for engines, cabins, and airline shells.

Get in touch with our experts to calculate your potential gain and receive a free quote. They can help you claim the Aviation R&D tax credit without upfront costs.

FAQs

What kind of companies can apply?

Companies that conduct qualifying research activities in the aviation industry.

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, lab results, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.