The R&D tax credit is a federal incentive open to all U.S. businesses conducting research and development. It allows you to claim funds that can be reinvested in your company.
Architecture firms interested in R&D tax credits often aren’t sure if their projects and expenses are eligible. The IRS has published clear guidelines on what counts as qualified research and spending. Plus, architects can use automated tools to streamline the claims process and make sure they don’t miss out on money they deserve.
Qualifying R&D Activities and Job Titles
Architecture firms involved in the following activities may be eligible for the federal R&D tax credit:
- Exploring new materials to boost energy efficiency
- Investigating alternative design approaches
- Using building information modeling (BIM)
- Researching structural design solutions
You may also qualify for R&D tax credits for architects if you employ:
- Project architects
- Designers
- Drafters
To be certain your R&D activities qualify for a tax credit, carefully review the IRS guidelines that outline which expenses and activities are eligible or not.
IRS Guidelines for R&D Tax Credits
Architecture firms can find all the details on R&D tax credit eligibility in Section 41 of the IRS website.
To qualify for the R&D tax credit, your company’s activities must meet all four parts of the following test:
- The Section 174 test: All costs must be R&D expenses in an “experimental or laboratory sense” and directly related to your business.
- The discovering technological information test: The research must aim to resolve uncertainty about improving or developing a business component. The process must use computer science, biological or physical sciences, or engineering, as per IRS rules.
- The business component test: Your research must be intended to create a new or improved business component. This includes products, software, formulas, processes, inventions, or techniques.
- The process of experimentation test: The research must 1) identify the uncertainty in improving or developing a business component, 2) outline at least one possible solution, and 3) test and evaluate those alternatives.
The IRS also specifies which research expenses qualify for the R&D tax credit. Eligible research expenses include:
- Employee wages: Salaries paid to employees who carry out, directly supervise, or directly support qualified research activities.
- Supplies: Any tangible property used in qualified research.
- Contract research expenses: Sixty-five percent of the costs paid to non-employees who perform qualified research activities.
The IRS also lists activities that are excluded from R&D tax credit eligibility:
- Research conducted after commercial production has started
- Customizing a business component for a specific client
- Duplication
- Research, studies, or surveys related to management functions
- Internal-use software
- Research performed outside the U.S., Puerto Rico, or other U.S. territories
- Research in the social sciences
- Research funded by grants, contracts, or third parties
Maximize Your Tax Credit Claims with Boast
With Boast, you no longer have to spend valuable time and resources on the R&D tax claim process—Boast handles it for you. Our AI-powered solution, BoastClaim, automatically collects data from your systems and identifies eligible research activities and expenses. On average, we help clients increase their tax claims by 15% and save 60 hours a year—so you can focus on what matters most.
Download our ultimate guide to R&D tax credits (or SR&ED for Canadian businesses) to get everything you need to qualify for R&D tax credits.
