Federal R&D tax credit under IRC §41  |  Prefer one question at a time? Try the Guided Calculator 1-888-393-0045
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What is your R&D worth in tax credits?

Estimate your federal research credit, payroll tax offset and prior-year opportunity in about three minutes.

Up to 14%
of qualified spend above your base
$500,000
yearly payroll offset for startups
3 years
back by amended return

R&D tax credit estimate

Prepared with the Engineered Tax Services R&D Tax Credit Calculator on . Planning estimate only.

Showing an example company. Replace the numbers with yours.

Your company

Sets your credit options and checks if you can apply the credit to payroll taxes instead of income tax.

Total revenue before expenses.
Companies with 5 or fewer years of revenue can use the payroll offset.
This can't be later than the tax year you are claiming.

Qualified research expenses

U.S. costs only. Use W-2 Box 1 wages and the share of each person's time spent designing, building, testing or improving.

Wages for research staff

Role or teamTotal W-2 wagesTime on R&DQualified
Qualified wages $0

Include engineers, developers, technicians, and supervisors who directly lead the work. A best estimate of time is fine: count work on new or improved products, tooling or processes, not routine production.

Other qualified costs

Materials used up in testing or prototypes.
Outside engineers, labs or consultants paid for R&D. Enter the full amount; 65% counts.
Cloud or rented computers for design and testing. Equipment you buy does not count.

Research spending history

The credit rewards spending above half of your average for the last three years. Answer yes even if you never claimed the credit.

Did you do this kind of work in each of the last 3 years?

We filled these in from this year's spending. Replace them with your actual numbers if you know them.

Does your work qualify?

The IRS uses a four-part test. Check each statement that describes your projects.

How we calculate your estimate

We use the Alternative Simplified Credit, the method most companies file. A full ETS study also tests the regular credit method and uses whichever gives you more.

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Qualified expenses
QREs = wages × time on R&D + supplies + cloud + 65% of contract research

Only research performed in the U.S. counts. Research a customer pays for regardless of the outcome is excluded.

The credit
Credit = 14% × (QREs - 50% of the prior 3-year average)
Missing a prior year: 6% × QREs

The §280C election, made on a timely filed original return, reduces the credit by 21%, for an effective rate of 11.06% (4.74% without full history).

Using the credit

The credit reduces federal income tax, and unused amounts carry forward for 20 years. Companies with under $5 million in gross receipts and 5 or fewer years of revenue can instead elect, on a timely filed original return, to apply up to $250,000 against employer Social Security tax and up to $250,000 against employer Medicare tax each year.

Since the 2025 tax law, U.S. research costs are fully deductible again under §174A for tax years beginning after 2024.

This calculator estimates the federal research credit under IRC §41 using the Alternative Simplified Credit. It does not include state credits, the regular credit method, §38 general business credit limits, controlled group rules, or limits that apply to pass-through owners. Prior-year amounts use a simple 6% rate because their base periods are unknown, so they may be higher or lower in a full study. Assumes a calendar tax year. Results are not tax, legal or accounting advice, and every claim must be supported by an R&D study and documentation.

Estimated net credit
$0
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