R&D tax credit · Free calculator
R&D Tax Credit Calculator.
Estimate how much your company could qualify for in federal R&D tax credits.
Enter your research expenses and company history to estimate your federal R&D credit using the regular or alternative simplified calculation method — and see whether a startup payroll tax offset may be available.
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Step 1 of 4
Your company
Four different years matter here — when you incorporated, when you first had revenue, when research began, and when you first claimed the credit. They are often not the same year, and each drives a different rule.
Basics
The year the tax year begins. Rules are modeled for 2025 and 2026 only.
Affects the §280C comparison and how the payroll election is limited.
Used to surface rules that commonly apply — it does not change the arithmetic.
History
Used for the payroll-offset eligibility test only.
The first year the company paid for work that meets the four-part test — not the year it first claimed a credit. Not sure whether your development qualifies? Read our guide.
Count only years that actually had QREs; they need not be consecutive.
Prior claims
Anything unusual
These don't stop the estimate, but they change how the rules apply. We flag them for review rather than guess.
This calculator provides an estimate for planning purposes. It is not a determination that your activities or costs qualify for the credit. Actual eligibility and the amount available depend on your activities, tax history, elections, and records.
Before you rely on the number
Does your company's work actually qualify?
The federal credit is based on qualified research activities and qualified expenses — not on everything your engineering or product team spends. Writing code isn't research by itself; resolving technical uncertainty through experimentation is. These two guides are the fastest way to check your assumptions before you enter numbers above.
You're building software. Does that mean you qualify for the R&D tax credit?
The four-part test, technical uncertainty, the process of experimentation, AI-assisted development, internal-use software, and which activities routinely don't qualify.
Read the guide Qualified expenses · 5 min readWhich software development expenses qualify for the R&D tax credit?
Employee wages and the 80% rule, founder compensation, the 65% contractor rule, foreign developers, cloud computing, and the documentation the IRS expects.
Read the guideWhat this calculator covers
The federal research credit under IRC §41 for tax years beginning in 2025 and 2026: both calculation methods, the §280C(c) reduced-credit comparison, and qualified-small-business payroll offset eligibility under §41(h).
What it leaves out — on purpose
State research credits (many states have one; several are worth checking), controlled-group aggregation, short-year annualization, funded research, and the general business credit limitation. Each is flagged rather than guessed, and none is added to the federal figure.
Common questions
The R&D credit, answered
No. Work qualifies when it aims to develop or improve a product or software component, depends on computer science or another hard science, faces technical uncertainty at the outset, and resolves it through a process of experimentation. Building a standard login flow or redesigning a dashboard generally doesn't; working out how to keep an application fast at 100× the load often does. Our guide walks through examples.
Yes. The credit doesn't require revenue or taxable income. A pre-revenue company can carry the credit forward for up to 20 years — and if it's a qualified small business, it can elect to apply up to $500,000 a year against employer payroll taxes instead. Watch one detail: interest income counts as gross receipts for these tests.
Only W-2 wages for time the founder actually spent performing, directly supervising, or directly supporting qualified research. A founder who codes half the year and fundraises the other half contributes half their wages — if the time can be substantiated. An unpaid founder contributes nothing, however much they build; equity isn't a wage. More on founder pay.
Generally no. Research performed outside the United States, Puerto Rico, or a US possession is excluded from the federal credit regardless of who employs the person or where they're paid from. Those costs may still be deductible (foreign research is amortized over 15 years under §174), which is a different question from the credit.
Some of it. Payments to rent computing you don't own, located off your premises, used in qualified research — test environments, experiment compute, model training during development — can be qualified "computer rental" expenses. Production hosting, SaaS subscriptions, and general business tools don't automatically qualify. Separate research usage from production on the invoices.
Both reward research spending above a base. The regular credit is 20% of QREs over a base built from a fixed-base percentage × average gross receipts for the preceding 4 years, never less than 50% of this year's QREs — so in practice it tops out at 10% of QREs. The ASC is 14% of QREs over 50% of the prior 3-year average QREs (6% of QREs if any of those years had none). Which is larger changes with your history, which is why the calculator shows both.
Yes, two ways. The credit carries forward 20 years and offsets income tax once the company is profitable. And a qualified small business — under $5M in gross receipts and no gross receipts before the 5-tax-year window ending with the credit year — can elect to use it against payroll taxes now.
For qualified small businesses, yes — up to $500,000 a year for 2025 and 2026, for at most 5 tax years. The election is made on Form 6765 with a timely filed original return, then claimed quarter by quarter on Form 8974 with Form 941, starting the quarter after filing. It reduces the employer share of Social Security tax first, then Medicare; whatever a quarter's payroll tax can't absorb carries forward. It isn't a lump-sum refund. IRS Form 8974 instructions.
A deduction lowers taxable income; a credit lowers tax dollar for dollar. For tax years beginning after 2024, domestic research costs are deductible under §174A — and the two interact: §280C(c) reduces the deduction by the credit amount unless you elect a reduced credit (79% of the full amount). The calculator shows both so the trade-off is visible. IRS Form 6765 instructions.
Want us to turn the estimate into a documented claim?
We prepare the credit study, Form 6765, and the payroll election — documented to audit standard, with the activities and expenses tested against the rules before anything is filed.