R&D tax credit · Free calculator
R&D Tax Credit Calculator.
Estimate how much your company could qualify for in federal R&D tax credits.
Enter your potentially eligible research expenses and a little company history. We'll estimate your federal R&D credit with both calculation methods the IRS allows, and show whether your startup could use it against payroll taxes even while it operates at a loss.
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Step 1 of 4
Your company
A few dates decide which rules apply to you: when you first had any gross receipts, when you started research, and whether you've claimed the credit before. Pick the closest answer; you can change anything later.
Basics
The year the tax year begins. Rules are modeled for 2025 and 2026 only.
Affects how the credit interacts with your deduction (Section 280C) and how the payroll tax election is limited.
Used to surface rules that commonly apply — it does not change the arithmetic.
History
Used for the payroll tax election eligibility test only.
The first year the company paid for research work that would qualify under the IRS four-part test — not the year it first claimed a credit. Not sure whether your development qualifies? Read our guide.
Count only years that actually had eligible research expenses; they need not be consecutive.
Prior claims
Anything unusual
These don't stop the estimate, but they change how the rules apply. We flag them for review rather than guess.
This calculator provides an estimate for planning purposes. It is not a determination that your activities or costs qualify for the credit. Actual eligibility and the amount available depend on your activities, tax history, elections, and records.
Before you rely on the number
Does your company's work actually qualify?
The federal credit is based on qualified research activities and qualified expenses — not on everything your engineering or product team spends. Writing code isn't research by itself; resolving technical uncertainty through experimentation is. These two guides are the fastest way to check your assumptions before you enter numbers above.
You're building software. Does that mean you qualify for the R&D tax credit?
The four-part test, technical uncertainty, the process of experimentation, AI-assisted development, internal-use software, and which activities routinely don't qualify.
Read the guide Qualified expenses · 5 min readWhich software development expenses qualify for the R&D tax credit?
Employee wages and the 80% rule, founder compensation, the 65% contractor rule, foreign developers, cloud computing, and the documentation the IRS expects.
Read the guideWhat this calculator covers
The federal research credit under IRC §41 for tax years beginning in 2025 and 2026: both calculation methods, the §280C(c) reduced-credit comparison, and qualified-small-business payroll offset eligibility under §41(h).
What it leaves out — on purpose
State research credits (many states have one; several are worth checking), controlled-group aggregation, short-year annualization, funded research, and the general business credit limitation. Each is flagged rather than guessed, and none is added to the federal figure.
Common questions
The R&D credit, answered
No. Work qualifies when it tries to develop or improve a product or software component, relies on computer science or another hard science, faces real technical uncertainty at the start, and works through that uncertainty by testing alternatives. Building a standard login flow or redesigning a dashboard generally doesn't; working out how to keep an application fast at 100× the load often does. Our guide walks through examples. Source: IRC §41(d), the four-part test.
Yes. The credit doesn't require revenue or taxable income. A pre-revenue company can carry the credit forward for up to 20 years — and if it's an eligible startup, it can elect to apply up to $500,000 a year against employer payroll taxes instead. One detail to watch: interest income counts as gross receipts for the startup tests. Source: IRC §39 (carryforward) and §41(h) (payroll election).
Only W-2 wages for time the founder actually spent doing, directly supervising, or directly supporting eligible research. A founder who codes half the year and fundraises the other half contributes half their wages — if the time can be substantiated. An unpaid founder contributes nothing, however much they build; equity isn't a wage. More on founder pay. Source: IRC §41(b)(2).
Generally no. Research performed outside the United States, Puerto Rico, or a US possession doesn't count toward the federal credit, whoever employs the person and wherever they're paid from. Those costs may still be deductible — foreign research is spread over 15 years — which is a separate question from the credit. Source: IRC §41(d)(4)(F); §174.
Some of it. Paying to use computers you don't own, located off your premises, for eligible research — test environments, experiment compute, model training during development — can count as "computer rental" expenses. Production hosting, SaaS subscriptions, and general business tools don't automatically qualify. Separate research usage from production on the invoices. Source: IRC §41(b)(2)(A)(iii); Treas. Reg. §1.41-2(b)(4).
Both reward spending more on research than you did before. The traditional calculation method (regular credit) is 20% of eligible research expenses above a base built from your history of research and gross receipts; the base is never less than half of this year's expenses, so in practice it tops out at 10% of eligible expenses. The simplified calculation method (ASC) is 14% of eligible research expenses above half of your average for the three prior years (6% of this year's expenses if any of those years had none). Which is larger depends on your history, which is why the calculator shows both. Source: IRC §41(a)(1), (c)(1)–(4).
Yes, two ways. The credit carries forward 20 years and reduces income tax once the company is profitable. And an eligible startup — under $5 million in gross receipts this year and no gross receipts before the five-tax-year window ending with the credit year — can elect to use it against payroll taxes now. Source: IRC §39(a); §41(h)(3).
For eligible startups, yes — up to $500,000 a year for 2025 and 2026, for at most five tax years. The election is made on Form 6765 with a timely filed original return, then claimed quarter by quarter on Form 8974 with Form 941, starting the quarter after filing. It reduces the employer share of Social Security tax first, then Medicare; whatever a quarter's payroll tax can't absorb carries to the next quarter. It isn't a lump-sum refund. Source: IRC §41(h), §3111(f); IRS Form 8974 instructions.
A deduction lowers taxable income; a credit lowers tax dollar for dollar. For tax years beginning after 2024, US research costs are deductible — and the two interact: claiming the credit reduces the deduction by the credit amount unless you elect a reduced credit (79% of the full amount). The calculator shows both so the trade-off is visible. Source: IRC §174A, §280C(c); IRS Form 6765 instructions.
Want us to turn the estimate into a documented claim?
We prepare the credit study, Form 6765, and the payroll election — documented to audit standard, with the activities and expenses tested against the rules before anything is filed.