New products, better processes, custom tooling, automation, improving how you make things is technical work, and much of it qualifies. Manufacturing is one of the most consistent R&D credit industries there is.
Request a Complimentary AssessmentManufacturers innovate constantly, developing new products, improving yield and quality, designing tooling, automating lines, testing materials. Each involves technical uncertainty and experimentation, exactly what the credit rewards. And the credit covers both the products you develop and the processes you use to make them.
Developing and iterating a product design to meet performance and cost targets.
Re-engineering a production process to raise yield or quality under real uncertainty.
Designing custom tooling or automating a line where the approach wasn’t obvious.
Many manufacturers claim product development but miss the process side, tooling, automation, yield and quality improvement, which is often the larger pool. Routine production and standard quality control don’t qualify, but the technical development behind them does. And for custom or contract work, whether it qualifies can turn on who bears the risk and owns the result.
A new or improved product or production process.
Grounded in engineering and the physical sciences.
It was uncertain whether the design or process would achieve the target.
Resolved through prototyping, testing, and production trials.
Yes, developing a new or improved process, better yield, quality, or efficiency, is squarely within the credit, and it’s often overlooked.
It can qualify, though for customer-funded work the contract terms matter. We review who bears the risk and owns the result.
Yes, the trials that didn’t work are part of the process of experimentation the credit rewards.
This page is general information, not tax or legal advice. Whether specific activities and expenses qualify depends on the taxpayer’s facts and applicable law, and is determined through the appropriate R&D study. Novaric does not guarantee eligibility, credit amounts, or any IRS outcome.