R&D Tax Credit Estimator

The federal Research & Development (R&D) tax credit under IRC Section 41 rewards businesses for qualified research activities — software development, product engineering, process improvement, and more. This estimator calculates your potential credit using both the Regular Credit method and the simpler Alternative Simplified Credit (ASC) method so you can choose the higher one.

Current Year Qualified Research Expenses (QREs)

W-2 Wages for R&D Employees ($)

R&D Supplies / Materials ($)

Contract Research Expenses ($)

Only 65% of contract research qualifies

Cloud Computing for R&D ($)

Prior 3-Year Average QREs (for Regular Method)

Avg QREs (3 prior years) ($)

Leave blank if no prior R&D

Avg Gross Receipts (3 prior yrs) ($)

Total QREs (current year)

Best Credit Method

Estimated R&D Credit

After Deduction Reduction (§280C)

Regular Credit (20%)

Fixed-base %

Base Amount

Excess QREs

Credit (20%)

Alt. Simplified Credit (14%)

Prior 3-yr avg QREs

Base (50% of avg)

Excess QREs

Credit (14%)

Startups (<5 yrs, <$5M gross receipts) may apply up to $250,000 of this credit against payroll taxes instead of income tax. Consult a CPA to document your qualified activities — the IRS requires contemporaneous records of the 4-part test (technological in nature, discovery test, elimination of uncertainty, experimentation process).