R&D Tax Credits for the Food Processing Industry

In the U.S., we have a strong R&D tax credit that rewards this exact activity. This federal credit offsets the costs of employee wages and supplies involved in the research required to create new products or improve existing ones. In fact, 42 states also have a tax credit that often mirrors the federal credit. As a result, you may be able to double the cash benefits allotted. In addition, the IRS does allow a three-year catch-up period for any missed credits; and since the R&D tax credit has recently been made permanent, owners of these companies can get these credits annually. 

Additional Tax Advantages: Alternative Minimum Tax Offset—Plus $250,000 in Payroll Offset for Startups

If you operate a small business with $50 million or less of gross receipts, you can claim your R&D tax credit against your Alternative Minimum Tax (AMT) tax bill.

If you’re a startup—even if you’re not paying federal income tax—you can use your R&D tax credit to offset up to $250,000 of your FICA payroll tax for your first five taxable years. But you must have gross receipts of less than $5 million in the tax credit year, along with zero gross receipts for any taxable year before the five-taxable-year period that ends with the tax credit year.