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As an Engineering firm, you might wonder which types of activities are eligible for the Research and Development (R&D) Tax Credit. EPSA USA is here to help you understand which day-to-day activities match the criteria for eligibility in section 41 of the IRS Tax Code and Why 

Why are engineering firms typically eligible for the R&D Tax Credit in the US?

Most of the projects engineering firms perform, and not only the most innovative ones, meet the R&D Tax Credit 4-part test requirements in the IRS tax code, as they:

  1. Develop or improve a product (the final design),
  2. To eliminate an uncertainty (appropriate design/capability/methodology),
  3. Through a Process of experimentation (systematic trial and error process),
  4. That is technological in nature (based on multiple engineering principles).

What are the eligible engineering sectors for the R&D Tax Credit in the US?

Several engineering sub-sectors listed below typically yield significant R&D Tax Credits for our clients, as all of their work and related expenditures usually qualify:

  • Structural engineering
  • Mechanical engineering
  • Civil engineering
  • Electrical engineering
  • Chemical engineering

What about the engineering activities? Which ones can qualifiy for the R&D Tax Credit?

The eligibility of the R&D Tax Credit does not only consider the sector, but more importantly the activities conducted by employees and subcontractors within a project. Here are a few examples:

  • Design and evaluation of structural and mechanical building systems
  • Design and development of MEP and HVAC systems
  • Computer Aided Design modeling and simulation
  • Development of system automation and custom controls
  • Site specific drainage, roadway, grading and foundation design
  • Evaluation of site constraints, structural loads and systems integration to meet engineering requirements

Are you an engineering firm working in these sectors and performing the activities listed above?

Request an assessment to check out your eligibility for the R&D Tax Credit!

Is your industry not mentioned? These lists are not exhaustive, so request your assessment now to find out your eligibility!