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Medical Devices R&D Tax Credits

The global medical devices market is currently worth $495.46 billion (2022) and is expected to grow to $718.92 billion in 2029 at a projected CAGR of 5.5%. This industry is an integral part of the healthcare system since advancements in medical technology are essential to the efficient delivery of healthcare services. For that reason, medical device companies invest considerable sums in R&D. For instance, European and US medical tech companies spent over $23.8 billion on research in 2020 alone.

With a portion of revenue invested in R&D operations, many medical device companies can apply for an R&D tax credit in the Medical Devices industry. Accordingly, if your firm is designing new devices, systems, and procedures to lower human error, enhance patient outcomes, and speed up recovery, you can also claim this benefit. The R&D credit can help offset as much as 22% of qualifying costs, considering your company’s location, as regulations vary from state to state.

Qualifying Costs and Activities

Your medical equipment innovations should include at least one of the following activities to qualify for the Medical Devices research and development tax credit:

  • Forming new cybersecurity standards to safeguard patient data;

  • Integrating telemedicine and telehealth to improve wearables;

  • Creating product prototypes for testing and validation;

  • Designing and producing RFA or advanced thermal systems;

  • Using new composites or materials to enhance a current product’s performance or functionality;

  • Validation testing to meet FDA and other regulatory agency criteria.

Your firm can also claim the credit if outside contractors have performed the qualified R&D work. The incentive covers job positions like human-centered design engineers, surgical robotics and machine learning engineers, software engineers, biocompatibility and toxicology scientists, C-suite, data analysts, and cybersecurity specialists. Moreover, you can include raw materials and supply costs connected with your operations in the QREs.

If you require more information on the Medical Devices R&D tax credit, don’t hesitate to get in touch with our dedicated team. We can review all of your company’s activities to identify which locations and costs qualify and assemble proof to support your claim.



What kind of companies can apply?

Medical device manufacturers 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, purchase orders, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.

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