Pick the page written in your vocabulary
Each page maps your everyday work to the statute, shows where the expenses usually sit, and names the exclusion most likely to apply to you.
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SaaS & Software
Everyday engineering, misread as “just building the product”
New architectures, novel algorithms, AI/ML systems, performance and scale work. Customer-facing SaaS generally escapes the internal-use software threshold - the question is whether you were resolving technical uncertainty.
- QREs that carry it
- Engineering wages, then cloud and compute rented for development, test, and training runs.
- Most often missed
- Cloud spend left out of the QRE base
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Technology & Hardware
Iterate, measure, iterate - the credit was written for this
Prototyping, firmware, PCB and signal integrity, thermal and mechanical design, materials, and design-stage test. Failed prototypes count: the test is the process, not the outcome.
- QREs that carry it
- Engineering wages, plus real supply spend - the materials and components consumed proving out a build.
- Most often missed
- SBIR/STTR and customer-funded development never screened
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Manufacturing
The process is a business component too
Process development, tooling and fixtures, automation integration, scrap and yield engineering, first-article and pilot runs. Improving how you make a part qualifies even when the part never changes.
- QREs that carry it
- Technical wages, plus materials and scrap consumed in development trials and pilot runs.
- Most often missed
- Customer-funded NRE and tooling claimed without reading the PO
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Pharmaceutical & Biotech
High-value claims that have to survive an exam
Discovery, assay and analytical method development, formulation, preclinical work, bioprocess development and scale-up. Life-sciences claims draw scrutiny, so substantiation is the whole game.
- QREs that carry it
- Scientist and technician wages and U.S. contract research (CRO work, included at 65%), plus reagents and consumables.
- Most often missed
- Grant- and partner-funded work not screened under §41(d)(4)(H)
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Aerospace & Defense
Qualification testing is R&D, not overhead
Airframe and propulsion development, avionics integration, new materials, and the qualification and certification testing that proves a design. Government and customer funding needs a rights-and-risk read before it is screened out.
- QREs that carry it
- Engineering wages, plus materials and components consumed in prototype and qualification testing.
- Most often missed
- Customer- and government-funded development never screened under §41(d)(4)(H)
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Engineering
Engineering that resolves real uncertainty, not routine calculation
Structural, geotechnical, civil, MEP, and product engineering that has to resolve a genuine technical uncertainty - a transfer structure with no precedent, a site that defeats the standard drainage approach, a part that must pass a new fatigue test - as distinct from applying known methods.
- QREs that carry it
- Engineer and designer wages on projects with a genuine technical unknown.
- Most often missed
- Routine code-compliance work mixed in with the real design work
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Architecture
Performance-driven design, never style or appearance
Energy and performance modelling that changes the design, new facade assemblies, mass timber and low-carbon structure, and parametric exploration scored against measurable criteria. Aesthetic design is excluded by statute, and fee agreements decide the rest.
- QREs that carry it
- Architect, designer, and modeller wages, plus performance consultants you pay whatever the outcome.
- Most often missed
- A stipulated-sum agreement assumed to settle the funding question
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Food & Beverage
Formulation and process work the industry rarely claims
New formulations, shelf-life and stability testing, process development, and packaging engineering. Iteration you would call “recipe testing” is often the process of experimentation the statute asks for.
- QREs that carry it
- Food scientist and technician wages, plus ingredients and materials consumed in trial batches.
- Most often missed
- Trial-batch materials left out of the QRE base
The rules that do not change with your industry
Six things every study has to get right, whether the business component is a bioreactor protocol or a query planner.
The unit is the business component
The four-part test runs against each product, process, computer software, technique, formula, or invention - not against your R&D budget, your cost centers, or your epics (§41(d)(2)(B)). One weak component does not sink the strong ones.
Process counts as much as product
“Process” is in the statutory list. A manufacturing process, a purification step, or a build-and-deploy pipeline you never sell is as eligible a business component as the thing it produces.
Uncertainty is about capability, method, or design
You qualify when the information available to you does not establish whether you can do it, how to do it, or what the right design is. It does not have to be new to the world - only unresolved for you.
Failure is still qualified research
The credit rewards a systematic process of evaluating alternatives. Prototypes that failed, models that underperformed, and approaches you abandoned are part of the claim, not evidence against it.
Only U.S.-performed research counts
Research conducted outside the United States is excluded (§41(d)(4)(F)) - regardless of who employs the engineers or where the invoice is paid. Offshore development is the most common silent overstatement we see.
Who paid, and who bore the risk, decides
Research funded by another party is generally excluded (§41(d)(4)(H)). The analysis is contractual: whether payment was contingent on success and whether you retained substantial rights in the results.
Each of these is worked through in detail in the four-part test guide, and the money side is in qualified research expenses. How the credit is computed - regular method, ASC, and the §280C election - is in calculation methods.
Which QRE categories dominate, by industry
The four statutory expense categories are the same everywhere. Their relative weight is not - and the category a company forgets is usually the one its industry treats as ordinary overhead.
| Industry | Wages | Supplies | Contract research | Computer rental |
|---|---|---|---|---|
| SaaS & SoftwareWages dominate; rented cloud and compute is the category most often left out. | Usually the largest block | Situational | Often material | Often material |
| Technology & HardwarePrototype materials and components consumed in test are real money here. | Usually the largest block | Often material | Often material | Situational |
| ManufacturingTrial-run materials and development scrap sit alongside shop-floor engineering time. | Usually the largest block | Often material | Situational | Situational |
| Pharmaceutical & BiotechU.S. CRO work - included at 65% - can rival internal payroll. | Usually the largest block | Often material | Usually the largest block | Situational |
| Aerospace & DefenseCoupons and test articles consumed in qualification are a real supply line. | Usually the largest block | Often material | Often material | Situational |
| EngineeringAlmost entirely people; specialist consultants and test labs are the only other material line. | Usually the largest block | Situational | Often material | Situational |
| ArchitectureDesign wages carry the claim; performance consultants count only when you bear their cost. | Usually the largest block | Situational | Often material | Situational |
| Food & BeverageTrial-batch ingredients and packaging are the line most often left out entirely. | Usually the largest block | Often material | Often material | Situational |
Your industry is not on this list. Do you still qualify?
Probably - and the reason is structural. §41 never mentions an industry. It asks whether a business component was being developed or improved, whether the work relied on the physical, biological, or engineering sciences or computer science, whether real technical uncertainty existed, and whether you resolved it by evaluating alternatives. Agtech, medical devices, tool-and-die shops, energy and environmental engineering, and game studios all clear that framing routinely - and four industries that used to sit in this paragraph now have pages of their own: aerospace and defense, engineering firms, architecture firms, and food and beverage.
These eight pages exist because they are the eight where we have written the evidence patterns down in full - not because they are the eight the statute allows. If you build, formulate, engineer, or otherwise resolve technical problems for a living, the honest next step is a conversation about your facts rather than a search for your logo on a page.
Two more things that travel with every industry: most states with a corporate income or franchise tax run their own R&D credit off a similar research base, and §174A restored immediate expensing of domestic R&E for tax years beginning after December 31, 2024. A study that only chases the federal credit leaves both on the table.