How Can Food Manufacturing Companies Claim R&D Tax Credits?

by | Jun 1, 2022 | Food Manufacturing, Tax Credits

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The Food Manufacturing industry is facing a growing demand for healthier, more environmentally friendly, and delicious ingredients. Food manufacturing companies are conducting more research and development (R&D) than ever before as consumer preferences change. Food manufacturers devote a significant amount of time to developing and testing new goods and processes, which is precisely what the R&D Tax Credit was supposed to encourage in the first place.

Does your Food Manufacturing company qualify?

Here are some examples of food manufacturing activities that may be eligible for tax credits:

  • Creating new product and flavor profiles for recipe formulations
  • Evaluating and installing new machines and equipment
  • Creating new package designs that will provide longer shelf life.
  • Making prototype samples for new recipe testing and validation
  • Optimizing current formulations to meet specific nutritional needs

Applying the Four-Part Test

Once the potential qualifying activities are identified, the Four-Part test is applied to verify. These are:

  1. Permitted Purpose – This is a process or product that is being developed or upgraded to increase its function, performance, dependability, quality, or cost-efficiency.
  2. Elimination of Uncertainty – When developing or upgrading a product or process, this activity is used to eliminate technical uncertainty in the areas of methodology, design, techniques, or inventions.
  3. Process of Experimentation – This is a process of experimentation that is used to eliminate or resolve technical uncertainty.
  4. Technological in Nature – The process of experimentation must rely on the hard sciences including engineering.

How can KPT Consulting help?

Is your Food Manufacturing company missing out on the R&D tax credit? KPT Consulting can assist you in maximizing your return and reducing your tax liability. We can help you identify the full scope of eligible activities to ensure that your company receives the full advantage of the tax incentives.

For more information, contact us today!

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