Dairy Processing R&D Tax Credits

In the past decade, consumer views concerning health trends, the use of growth hormones, and genetic modification in the dairy industry have changed drastically. For this reason, dairy farmers are forced to experiment with alternative techniques in pasteurization, packaging, transportation, and other stages of the production process. While introducing such innovation is fairly expensive, it qualifies dairy processing companies for different state and federal incentives like R&D tax credit in the Dairy Processing industry.

Therefore, if your dairy company invests in qualifying activities, you might be able to claim this incentive. It can equal as high as 22% of your QREs, and you can carry it forward for up to twenty years. That said, the exact amount you can get depends on the state you conduct research in.

Qualifying Costs and Activities

Almost everything you spend on research can qualify as a QRE. For example, it can be wages for third-party contractors, cloud-computing costs, and paying for supplies and raw materials. In addition, you can cover certain positions like QA personnel, production managers, process and manufacturing engineers, PhDs, nutrition consultants, food scientists, equipment technicians, and C-suite.

Regarding the qualifying activities, you can claim the Dairy Processing R&D tax credit if your company:

• Creates innovative pasteurization procedures to extend shelf life and reduce disease or health problems;

• Experiments with cow tracking technologies, like chips, for grazing and reproduction;

• Increases cattle’s milk production through dietary supplement formulations and environmental changes (for instance, nutraceuticals, grass-feeding, increasing foraging space, and avoiding growth hormones);

• Upgrades bottling technologies to boost efficiency;

• Increases productivity with process automation;

• Creates innovative machinery to increase processing effectiveness (evaporators, separators, etc.)

Since calculating Dairy Processing research and development tax credit can be challenging, our experts can help you compute the potential sum. We can give you a free quote and walk you through the application process without any upfront costs.

FAQs

What kind of companies can apply?

Dairy processing 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.