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Food & Beverage R&D Tax Credit
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duration federal R&D credits can be carried forward


amount food and beverage companies can offset annual payroll tax


average of total food & beverage expenses that typically qualify

Food & Beverage R&D Tax Credits

Businesses in the food industry are actively trying to anticipate changes in customer behavior and enhance or launch new products. Some of the recent trends include plant-based and non-GMO foods, green and innovative packaging, and longer shelf life. In fact, 15,000 new food products are introduced each year.

The industries also use new processes and equipment like IIOT, Cloud, and voice technology to improve quality, automation, and efficiency while lowering costs and waste. That is because it usually takes nine months to bring a food or beverage product to market, and companies struggle to decrease that time.

However, most food and beverage firms are not aware that their daily activities may qualify for the R&D tax credit, which offers qualified businesses dollar-for-dollar tax savings on their revenue and/or payroll tax liability. Moreover, numerous states provide tax breaks to such companies. Even businesses in their early stages of development and start-ups with fewer than five years of income can use R&D tax credits to reduce future payroll taxes.

That’s why this article will discuss the activities and expenses that qualify for the R&D tax credit. You can use it to see where your food and beverage business could apply.

What Qualifies for an Research and Development Tax Credit in the Food and Beverage Industry?

Sectors such as dairy processing, seafood and meat processing, plant-based food production, co-packing, frozen foods, and packaged foods have already claimed hefty research and development tax credits. As a result, they have received millions to reinvest in their employees, infrastructure, and continuing innovation.

Some examples of qualified research activities in the food industry include:

  • Creating new formulas or recipes

  • Evaluating larger production methods for new or better products

  • Enhancing packaging to improve food quality and/or safety

  • Examining new products for different factors (e.g., allergens, pH level, shelf life, nutritional profile, c.)

  • Trying out unusual ingredients

  • Identifying approaches to improve production, processing, and distribution

  • Inventing new ways to enhance the supply chain

  • Developing software to aid operations

  • Testing new foods in experimental kitchens

Other Costs Covered by R&D Tax Credits

In the food and beverage industry, 28.40% of total expenses typically qualify for the R&D tax credit. Employee salary, raw materials and consumables, computer leasing charges, and third-party contractor expenses made all through the research and development process can all be claimed. For instance, you can use it to pay your in-house or third-party biochemists, test chefs, food scientists, quality control managers, nutritionists, operations managers, and more.

Companies can now alter past years’ tax filings (for the past three years), providing further financial rewards from tax refunds. If you are unable to use your R&D credits for the food industry right away, the IRS lets you carry them forward for up to twenty years.

When You Need Expert Help

Our experts have a success-based pricing system that allows enterprises in the food and beverage industry to claim R&D credits with no up-front costs. We provide comprehensive audit protection as well as a money-back guarantee.

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