R&D Tax Credits for the A/E/C Industry, Part 1: Architects, Engineers, and Contractors – OH MY!

But, at first glance and due to common misconceptions, it often seems strange and unusual for such R&D Tax Credits to be so fiscally powerful to this industry.  As a result, much of my preliminary consulting work in this area feels like guiding Dorothy, the Scarecrow, and the Tin Man (and yes, little Toto too) through the woods before meeting the Lion – R&D Tax Credits for Architects, Engineers, and Contractors?  OH MY!

However, through some education on Section 41 of the tax code, its associated regulations, and applicable case law, it becomes very clear how applicable R&D Tax Credits are to architects, engineers, construction companies, specialty sub-contractors, and energy service providers. Some of the primary tenets include:

  • New-to-the-world innovations and patents are NOT required – certain design, preconstruction, estimating, and upfront planning activities for construction projects may qualify, even site specific activities and activities required to ensure building and energy code compliance
  • Contracts are important to address, but much of the work paid by clients under contract could still qualify
  • Federal credits are dollar-for-dollar reducers of tax of up to 6.5% of qualified expenses
  • Over 40 states offer similar R&D tax incentives

So, how does an architecture firm with $1.8 million in annual revenues capture $55,250 in annual R&D Tax Credits? Or a $30 million general contractor capture $77,000 in annual R&D Tax Credits? Well, follow the yellow brick road by reading the subsequent parts of this series. We are off to see the Wizard!

Feel free to contact me directly at 888-773-8356, Ext. 702 or email at justin@braynconsulting.com with any questions.

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