Aerospace Industry Qualifying Activities

If you’re part of the aerospace industry, R&D tax credits are powerful tax-saving solutions that should definitely be on your radar. In fact, they’re ideal for this highly technological vertical.

This tax credit is ideal for the aerospace industry because aeronautical R&D projects are highly technical and complicated. They’re often long-term initiatives that demand that complex, interconnected systems collaborate seamlessly. To ensure that new aerospace systems function property, major iterative research and testing is necessary to adhere to project-specific criteria, rules, and laws.

Owing to this fact, if your research activities qualify, you can earn a substantial tax credit that you could use to:

• Immediately reduce your income and/or payroll tax liability
• Bank valuable tax credits to apply against future income tax owed
• Increase your business valuation
• Liberate capital for your business development, a concrete advantage in today’s uncertain economic times

Examples of Qualifying Activities for the Aerospace Industry

Consider applying for the credit if you create or develop:

• New or improved manufacturing processes to increase output, improve performance, or reduce waste
• Tooling, dies, and fixtures to create new or improved production processes
• Methods to reduce production costs and product weight
• New or improved aircraft, aerospace, and weaponry components for customers
• New aircraft components with exacting specifications or narrow tolerances
• Sequencing and re-sequencing manufacturing operations
• Prototypes and first articles to validate design and performance, including conducting quality control to test new iterations
• New machines, fixtures, jigs, and tools to manufacture and assemble aircraft 
• New composite materials
• Secondary operations, such as surface treatment of metals
• New or improved metal forming, welding, and machining techniques
• Efforts to improve communication, navigation, lighting, and in-flight entertainment systems in commercial planes
• Designs or kits to integrate new monuments, galleys, seats, or in-flight entertainment systems with an aircraft
• New heat-treatment profiles and procedures
• New automated processes 
• Software programs to automate production equipment
• New or improved aircraft simulators and cockpit software
• Modifications to comply with regulations, such as testing new equipment 
• Metallurgical, tensile, and gate freeze studies for evaluating products and components 
• Improved aircraft designs to reduce drag (for example, engineering narrower wings, smoothing the surface, or developing improved materials)
• New unmanned aerial vehicles (UAVs)

Qualifying Job Titles

Examine if you have these job titles on your payroll or if you hire third-party contractors with these responsibilities:

• Aerospace engineers
• Chemical engineers
• Computer-aided design (CAD) engineers
• Materials engineers
• Mechanical engineers
• Software engineers
• Aerospace technicians
• Aircraft designers
• QA/QC personnel