Substantial Savings for Construction Contractors: Qualifying for and Pursuing the R&D Tax Credit

Reprinted from Construction Executive, a publication of Associated Builders and Contractors. Copyright May 2017. All rights reserved. (link)

When the topic of research and development (R&D) tax credits is discussed, chemists with lab beakers typically come to mind. Instead imagine construction superintendents and engineers in hard hats and on a job site. More construction companies are taking advantage of the credit than ever before and are realizing substantial savings in the process.

Since the 1980s, the R&D tax credit has been claimed by manufacturers, software developers, chemical companies, technology companies and pharmaceutical companies. Recent changes in applicable law have allowed construction companies, engineering firms and architectural firms to also reap the benefits of R&D tax credit incentives. The tax incentive comes in the form of a federal tax credit that offsets tax liabilities dollar-for-dollar. In addition to the federal credit, most states have R&D tax credits of their own. The combination of these incentives can provide major savings for companies that qualify.

How can construction companies qualify for the R&D tax credit?

The R&D tax credit is an incentive designed to encourage businesses to invest in developing new or improved processes, techniques and products. Many construction companies actually perform these exact functions for their customers on a daily basis. Below are some activities that construction companies often conduct that may qualify for the R&D tax credit:

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Author:
Adam Quattlebaum, Senior Manager | DHG Tax
864.213.5368 | adam.quattlebaum@dhg.com