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Distillery R&D Tax Credits

The spirits business is booming, and the demand for high-end and premium spirits continues to grow. For this reason, companies are constantly improving production methods to make them faster, cheaper, and cleaner.

One way to take the edge off the costs of investing in research and innovation is to claim R&D tax credits. If you own a company in the sector, you can use the Distilleries research and development tax credit to reduce the tax obligation. With the help of state and federal R&D tax credits, you can get a refund of up to 22% of your total QREs. Of course, the exact sum depends on your company‘s location due to different R&D tax programs across the states.

Qualifying Costs and Activities

Generally speaking, every expenditure you make during research for third-party contractors, employee salaries, raw materials, and supplies is regarded as a QRE. With this incentive, you can cover job titles like R&D directors, QA and QC personnel, process improvement experts, microbiologists, fermentation specialists, distillery supervisors, distillers, chemists, and C-suite.

However, spirits firms are often unaware that many of their regular operations may qualify for an R&D tax credit in the distilleries industry. Some examples of qualifying activities include:

  • Enhancing filtration or fermentation processes or inventing new ones;

  • Recipes for taste, texture, and aroma profiles;

  • Using automation or robotics to increase product quality or distillation efficiency;

  • Mash heating methods and enzymes;

  • Researching secondary maturation procedures to improve taste (like stout beer barrels or wine and sherry casks);

  • Creating novel or enhanced distillation methods;

  • Introducing new waste management or recycling methods;

  • Creating and assessing prototype batches or improving production procedures;

  • Developing software to improve manufacturing, distribution, or on-site client experience (tasting rooms).

When You Need Expert Help

Reach out to us today to speak with our team of tax credit professionals to calculate your distillery R&D tax credit without upfront costs.



What kind of companies can apply?

Distilleries that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, lab results, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.

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