Chemical Company R&D Tax Credits

According to statistics, there were 14,582 chemical manufacturing facilities in the US in 2021. Moreover, the amount spent on chemical R&D in the United States in 2021 was almost 11.4 billion dollars. In other words, businesses in this industry invest considerably in research activities like developing new formulas and manufacturing methods. That makes them strong candidates for generous federal and state R&D tax programs.

One such incentive is the Chemicals R&D tax credit. In most cases, credit can reach 22% of total qualifying research expenses. However, the percentage changes according to the individual states and their regulations.

Qualifying Costs and Activities

Costs for raw materials, subcontractors, supplies, cloud computing services, and employee salaries are all regarded as qualifying research expenses. For example, you can cover wages for jobs like QA personnel, process and manufacturing engineers, PhDs and postdoctoral fellows, C-suite, laboratory technicians, environmental and chemical engineers, and chemists.

To claim the R&D tax credit in the Chemicals industry, your company must conduct some of these qualifying activities:

• Improving current processes to adhere to necessary laws, certifications, and norms;

• Exploring new stabilizers or additives to enhance the quality of the final product;

• Developing and testing novel formulas and goods;

• Introducing innovative 3D printing technology using alternative chemicals or materials;

• Creating and installing new machinery to optimize production procedures;

• Reviewing requests for novel chemical substances;

• Testing and using eco-friendly manufacturing techniques.

Our professionals can calculate how much you can get from the Chemicals research and development tax credit for free. We can also walk you through the application, and help you get the credit approved.

FAQs

What kind of companies can apply?

Chemical manufacturing 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.