Structural engineers are often surprised to learn that the work they do every day may qualify for valuable tax incentives, specifically the Research and Development (R&D) Tax Credit. While this credit is often associated with tech companies and labs, it’s just as relevant to engineering firms involved in designing, testing, and improving structural systems.
What is the R&D Tax Credit?
The R&D Tax Credit is a federal (and in many cases, state) incentive designed to encourage innovation and technical problem-solving. The credit rewards companies that invest time and resources into developing new or improved products, processes, or systems, even if the effort doesn’t result in a final product or solution.
For structural engineers, that could mean anything from developing a more efficient load-bearing design to exploring new materials or seismic reinforcement strategies.
How Structural Engineers Qualify
To qualify, an activity must pass the IRS’s Four-Part Test:
- Permitted Purpose: The goal must be to improve functionality, performance, reliability, or quality of a product or process.
- Technological in Nature: The work must rely on engineering or physical sciences.
- Process of Experimentation: There must be a process of evaluating alternatives or overcoming uncertainty.
- Elimination of Uncertainty: The work must attempt to eliminate uncertainty regarding the capability, method, or design of the structure or system.
Examples of Qualifying Activities:
- Designing new structural systems to meet evolving building codes
- Engineering foundations or supports in unusual site conditions
- Testing or modeling new construction methods
- Developing cost-effective solutions for large-span or high-load structures
- Iterating design alternatives using finite element analysis or other simulations
Benefits of Claiming the R&D Tax Credit
The financial benefits of claiming the R&D credit can be substantial. Eligible engineering firms can:
- Reduce federal income tax liability
- Increase cash flow
- Offset payroll taxes (for qualified small businesses)
- Reinvest savings into people, technology, or equipment
The credit can often be claimed retroactively for up to three prior tax years, and any unused credit can be carried forward for up to 20 years.
How to Claim the Credit
Claiming the R&D Tax Credit involves more than simply filling out a form. The IRS requires thorough documentation to support the claim, including:
- Time tracking by project and activity
- Technical narratives detailing the experimentation
- Cost accounting for qualified wages, supplies, and contractor expenses
That’s where partnering with a specialist like CSSI can make the process easier and more efficient. We work directly with structural engineering firms to identify qualifying activities, calculate eligible expenses, and create IRS-compliant documentation that stands up to scrutiny.
Ready to Unlock Your Credit?
Structural engineers are constantly solving technical challenges, that’s the kind of work the R&D Tax Credit was built for. Whether you’re designing smarter buildings, improving load calculations, or testing materials, there may be a hidden credit waiting for you.
Contact CSSI today to see how your structural engineering firm can take full advantage of the R&D Tax Credit and reinvest in future innovation.
