R&D Tax Credits in New Jersey
Can I Claim R&D Tax Credits in New Jersey?
Yes, you can claim R&D tax credits in New Jersey. The state offers a research and development tax credit program known as the Research and Development Tax Credit.
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The Research and Development Tax Credit (R&D) is a tax credit designed for businesses, regardless of their size, engaged in research and development activities in the United States. This tax credit has a broad application, encompassing a wide range of businesses and industries, extending far beyond the realm of scientists and research laboratories. The R&D tax credit was established to encourage research and development efforts undertaken in the United States. Over time, an increasing number of companies have been capitalizing on this tax credit. Furthermore, in 2015, the Protecting Americans from Tax Hikes (PATH) Act made the R&D tax credits permanent, providing startups with the opportunity to reap its benefits as well.
What are the Potential Benefits of the R&D Tax Credit?
Claiming R&D tax credits can lead to substantial cost savings for eligible companies. These benefits include:
- Increasing Cash Flow
- Federal and State Dollar-for-Dollar Income Tax Reduction
- Claim Credits for Open Tax Years Going Back 3-4 Years
- Reducing Your Tax Rate
$1.6 BILLION
Who Can Claim the R&D Tax Credit?
R&D tax credits are not limited to lab coat-wearing inventors and groundbreaking products. They are actually far broader and more inclusive than most people think.
Many companies, regardless of size or industry, are eligible for Research and Development (R&D) Tax Credits from the federal government. However, a large number of these companies are unaware of their eligibility. This means they are missing out on significant financial benefits from both federal and state R&D tax credits.
Many companies, regardless of their size or industry, are eligible for Research and Development (R&D) Tax Credits offered by the federal government. Unfortunately, a large number of these companies are unaware of their eligibility and miss out on substantial financial benefits. Numerous businesses are leaving money behind by not taking advantage of both federal and state R&D tax credits that they are entitled to.
The activities that qualify for the R&D tax credit directly contribute to the growth of your business.
- Developed new products
- Improved existing products
- Developed software for internal or external use
- Improved manufacturing processes
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The activities that qualify for the New Jersey R&D tax credit are the same ones driving growth in your business.
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10,700
How Do I Claim the R&D Tax Credit?
On average, companies can usually claim a federal R&D tax credit amounting to 7-10% of their eligible expenses. For instance, a software developer, engineer, or lab technician with an annual W2 income of $100,000 may realize tax savings of up to $10,000.
Expenses eligible for research activities within your company typically encompass employee compensation, materials, and contracted services. There are several types of documentation that can substantiate these qualified expenses, such as payroll records, financial records indicating supply or contract research expenditures, and vendor invoices.
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