Idaho’s R&D Tax Credit Could be a Gamechanger for Your Businesses

Boise, Idaho, USA downtown cityscape at twilight.

The IRS’s Tax Day extension provides Idaho business owners with the opportunity to assess their financial assets and examine any advantageous tax credits they may have overlooked.

Though the Research and Development tax credit is a federal program that rewards businesses investing in innovative efforts across the country, there are also efforts on the states’ behalf to incentivize these efforts as well. On the federal level, taxpayers can benefit from a dollar-for-dollar reduction on tax owings, as well as an offset to payroll taxes for some qualified businesses. 

Idaho has its own state laws in regard to the state Research and Development tax credit. Businesses that conduct qualified research in Idaho may be eligible for a 5% income tax credit that can be carried forward for up to 14 years. 

Though this lucrative business tax credit appears to be limited to the science and technology industries, many businesses, from electronics manufacturing to food processing, may be able to take advantage of the R&D tax credit and see a benefit to their bottom line.

What Industries Qualify for R&D in Idaho?

In the present day, technology has become an essential part of the workflow across many industries, and companies can leverage this use to qualify for the Research and Development tax credit. Craft breweries or wineries who are using mobile apps to elevate their communication may be eligible. An ammunition company that uses fingerprint technology to increase handgun safety at home may be able to claim it. Even companies in the investments and accounting industries, who have to keep up to date on cybersecurity software, can apply for this immediate source of cash flow.

What is the R&D four-part test?

Companies that apply for the Idaho Research and Development tax credit must prove that their activities meet the following criteria:

  1. Technological in Nature: Activities must rely on hard scientific evidence to be performed and proven.
  2. Permitted Purpose: Activities must be performed with the purpose of improving a business component or making it more efficient.
  3. Eliminate Uncertainty: Activities are seeking concrete answers about the development or improvement of a product.
  4. Experimentation: Activities must include prototypes, modeling, sampling, trial and error, or other scientific methods of experimentation.

Our team of tax experts will give you a free assessment to see if you qualify for Research and Development credits, as well as its payroll tax provision. We are here to help you earn your maximum tax benefit. Call us at (561) 257-3436 to speak with one of our qualified staff members.

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