Mechanical Engineering R&D Tax Credits

A wide range of sectors depends on the work of mechanical engineering companies. For instance, health, energy, product development, aviation, construction, and manufacturing all rely on engineers to develop products that satisfy customer needs and standards. For this reason, mechanical engineering businesses spend a lot of money on R&D. At the same time, too many of them fail to take advantage of the federal and state tax incentives they qualify for.

Therefore, if your company is in the mechanical engineering industry and you conduct specific qualifying activities, you can incur some of your expenses through the Mechanical Engineering research and development tax credit. In most cases, the incentive equals 22% of your total QREs. However, the exact sum will depend on the state in which you conduct R&D activities.

Qualifying Costs and Activities

QREs encompass every cost related to your research, such as third-party contractors, raw materials, and supplies. Moreover, you can cover paychecks for various job titles, such as product and mechanical engineers, software developers, project managers, CAD designers, BIM engineers, and C-suite. Furthermore, qualifying activities for the Mechanical Engineering R&D tax credit include:

• Developing innovative processes to lower labor and material expenses;

• Implementing techniques to enhance quality and decrease manufacturing time;

• Making and testing out prototypes;

• Developing novel sustainable energy technologies for use in next-generation engines, electric vehicles, wind turbines, solar panels, and other projects;

• Optimizing commercial airliner or military aircraft manufacture and production.

Contact our team if you need more help calculating your R&D tax credit in the Mechanical Engineering industry. We will provide you with a free estimate and help you get the credit without any upfront costs.

FAQs

What kind of companies can apply?

Mechanical engineering 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.