SR Guest Author Jill Neuvirth: Valuable Tax Incentives Just Got Better
The Research & Experimentation Credit (R&D Tax Credit) is one of the most valuable incentives available to U.S. businesses, rewarding companies that invest in innovation. Whether developing new products, improving existing processes, or enhancing software and technology, eligible taxpayers can claim dollar-for-dollar credits against their federal income tax liability. In addition, more than 35 states have R&D Tax Credits available on top of the federal credit. For many businesses, this means unlocking hidden cash flow and reducing overall tax burdens simply by capturing activities they are already doing every day.
Sec. 174 Deductibility Restored
With the recent reinstatement of Sec. 174 full deductibility of R&E expenditures, businesses can once again fully expense U.S. research costs in the year they are incurred, rather than amortizing them over five years. Combined with Sec. 41, this creates a powerful opportunity for immediate tax savings and strategic financial planning. The alignment between Sec. 41 credits and Sec. 174 deductions significantly increases the near-term tax benefit and strengthens long-term planning.
Broad Qualification and Retroactive Relief
Qualification for the credit is broader than many realize. Companies across industries—manufacturing, engineering, software development, life sciences, food and beverage, and more—may be eligible if they engage in activities involving technical uncertainty and a process of experimentation. Even small improvements to products or processes can qualify. Startups and closely held businesses can also benefit, with provisions allowing offsets against payroll taxes. In addition, recent legislation offers retroactive relief, creating opportunities to amend prior returns and capture missed deductions or credits. Notably, taxpayers of all sizes—not just those under the $31 million threshold—who incurred qualifying domestic R&E costs after December 31, 2021, and before January 1, 2025, can now accelerate the remaining deductions. These deductions may be spread over one or two years, offering faster access to tax savings.
Strategic Advantages for Business Owners
These incentives go beyond short-term tax savings. They strengthen valuations, improve liquidity, and create flexibility for tax planning, business growth, and succession strategies. By taking advantage of the research credit and related deductions, companies can reduce tax liabilities today while positioning themselves for long-term financial strength. Now is the time to evaluate your eligibility and ensure your business is maximizing these opportunities. Importantly, Michigan has a new R&D tax credit beginning in 2025, which includes an early application requirement that businesses won’t want to miss.
Partnering for Smarter Tax Planning
The Monetek team will work with your ShindelRock team to evaluate your eligibility, estimate your credit and refund potential, and build a smarter tax plan that supports continued innovation.