The Research & Development (R&D) Tax Credit.

Recent federal rules have eased and helped clarify ways in which companies can qualify for research and development (R&D) tax credits. The R&D tax credit is under-utilized simply because so many manufacturing companies don't realize that the work they are doing to improve their product or the process by which they make their product qualifies for the R&D tax credit.

The initial intent of the R&D tax credits when first introduced was to encourage U.S. businesses to invest in the development of new and improved products in order to help them keep up with foreign competition. The R&D tax credit can help businesses offset their research and development expenses by 20% or more, depending upon the state in which they operate. Additionally, it may be possible to apply for credits for the past three open tax years and even closed tax years in specific situations.