Established in 1987, the California R&D Credit closely follows the Federal R&D Credit. Taxpayers can reduce tax liability to the extent that they conduct qualified research and development activities within California. Major features of the California R&D Credit include:

  • The credit is equal to 15 percent of the incremental qualified expenditures
  • The credit may both be used to offset current-year tax liabilities and “carried forward” to offset tax liabilities in future years.

What is considered qualified research?

The definition of qualified research mirrors federal qualifications. Specifically, if you attempt to develop or improve any of the following, you may be eligible for the R&D credit:

  • Products
  • Processes (e.g. – manufacturing processes)
  • Computer Sciences
  • Software
  • Formulae
  • Techniques
  • Inventions

Firms in the following industries / sub-industries conducting R&D in California can be eligible for the credit:

  • Manufacturing – Electronics, Tool & Die, Fabrication improvements
  • High – Tech and Software Development – Software systems and high-tech component design and development
  • Life Sciences – Biotechnology, pharmaceuticals, medical device manufacturing
  • Agriculture – Viticulture improvements, wine production
  • Engineering Technology – Industrial design efforts, energy efficient design projects.
  • Chemicals – Chemical development and production

Why TRCG Advisors?

With an office in Los Angeles, TRCG actively works with businesses across the state to provide local service and support. TRCG has expertise in sustaining the R&D Credit through an audit process as well as claiming new credits. Our consultants can help you in determining which activities qualify and ensuring accuracy and due diligence.