Can you receive R&D tax credits for CMMC compliance expenses?
Federal and state Research and Development (R&D) Tax Credits are available to support companies developing and integrating new cybersecurity technology.
Expenses associated with obtaining CMMC certification Levels 1-5 may qualify for this tax credit. To qualify for the credit, companies must pass the statutory “four-part test”.
The Four Part Test
Qualifying R&D activities as they apply to the cybersecurity industry generally fall within four general buckets:
(1) New product development
(2) Incremental product improvement
(3) New process development, and
(4) Incremental process improvement
Additionally, over the past 30 years, there have been a number of changes to which activities qualify. Contrary to popular belief, the research tax credit isn’t limited to high-tech, biotech, and pharmaceutical companies. If your company does any of the following, you may qualify for the research credit:
- Design and/or manufacture products
- Produce parts to customer part prints or specifications
- Custom design and build machines for sale or use in operations
- Develop new, improved, or more reliable products/processes/formulas
- Design tools, fixtures, jigs, molds, or dies
- Develop or apply for patents
- Develop software
Start the four-part test to reduce your tax liability and reinvest your savings back into your business to become more competitive, grow faster, and increase profitability.
We understand this can be a very complex job, so please Contact Us so we can help.