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Packaged Foods R&D Tax Credits

Due to the intense competition in the packaging market, businesses are forced to invest more time and money in research and development. However, conducting such activities also allows them to apply for specific state and federal tax incentives, provided they fulfill the qualifying requirements.

Therefore, if your packaged foods firm develops cost-effective procedures, increases shipping effectiveness, or researches other innovations, you may be able to claim the Packaged Foods R&D tax credit. The credit usually equals 22% of your total QREs. However, the final sum depends on the state you conduct research in.

Qualifying Costs and Activities

QREs for Packaged Foods research and development tax credit include all research-related costs. For example, expenses for third-party contractors, raw materials, and supplies. The incentive also covers positions like process and manufacturing engineers, packaging operators and specialists, packaging designers and engineers, food scientists, compliance managers, and C-suite.

As far as qualifying activities go, your company must conduct these or similar operations:

  • Enhancing current packaging (by making it more recyclable, biodegradable, or having a longer shelf life) or testing new materials;

  • Evaluating product designs to adhere to standards and maintain them;

  • Optimizing the manufacturing process to decrease the emissions, waste, weight, or transportation time of the final product;

  • Increasing productivity by adding automation to the production process;

  • Testing to check that food is adequately sealed for transit and consumption.

Contact our experts if you have any questions about calculating the R&D tax credit in the Packaged Foods industry. We can give you a free quote and help you with the application process without any upfront costs.

 

FAQs

What kind of companies can apply?

Packaged foods companies 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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