Plant-Based Business R&D Tax Credits

In 2021, the plant-based food industry was worth $7 billion, which accounts for a 27% increase compared to 2020. Such a demand, as well as stiff competition, inspire plant-based businesses to invest continually in R&D. That means that companies experimenting with novel recipes, making production processes safer for employees, or developing plant-based meat alternatives, qualify for state and government R&D tax incentives. If your firm conducts these or similar operations, you are also eligible for these benefits.

R&D tax credit in the Plant-Based Businesses industry can be equivalent to 22% of your total QREs. However, the percentage may vary depending on the state in which you conduct research.

Qualifying Costs and Activities

Qualified research expenses for the Plant-Based Businesses R&D tax credit include costs like third-party contractors, raw materials, and supplies. Furthermore, this credit will cover the wages of your test chefs, process and manufacturing engineers, packaging engineers and specialists, package designers, nutritionists, food scientists, compliance managers, and C-suite.

When it comes to qualifying activities, your company should be investing in one of the following operations:

• Developing and testing prototypes to evaluate new formulas and recipes;

• Evaluating large product batches to assure consistency, packaging, ideal handling, and shelf life;

• Modifying ingredients to better serve customer demands (for example, all-natural, organic, vegan);

• Enhancing the appearance, flavor, juiciness, and scent of plant-based meat substitutes;

• Adjusting procedures to accept certain raw materials and putting new technology into practice (for example, robotics, software, and ingredients).

Our team of experts can help you calculate the possible amount you can get if you apply for the Plant-Based Businesses research and development tax credit. Moreover, we will give you a free estimate and walk you through the application process.

FAQs

What kind of companies can apply?

Plant-based 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.