Recent changes to tax laws can qualify a wide range of manufacturers for an R&D tax credit of up to $1 million. This savings, combined with an equipment lease, can help them expand operations, and replace and update existing equipment or software without paying the full purchase price up front.

After years of extensions, Congress finally made the R&D tax credit permanent late last year. Moreover, eligibility for the credit has been expanded to include companies conducting applied as well as basic research, which means scores of manufacturers seeking ways to make a product quicker, cheaper, safer, greener, etc. may now qualify for this important credit.

More good news for all types of manufacturers

With the tax credit now permanent, many more manufacturers will likely jump to take advantage of potentially significant savings. For example:

• Manufacturers can now use their R&D credit to reduce their tax liability below their alternative minimum tax (AMT). Previously, the credit was unavailable to manufacturers that either did not owe federal income tax or were subject to the AMT.

• The Treasury Department has provided a more liberal view of which supply costs can be included for the R&D credit. This may be particularly advantageous for manufacturers of single, unique items that are often associated with higher-than-average supply costs.

The new, more expansive eligibility requirements open up many opportunities for forward-thinking manufacturers. For example, when combined with leasing, manufacturers can use the credit to replace and update old equipment, thereby allowing them to operate more efficiently, compete in new markets and increase their bottom-line.

Contact First American to learn more about the financing solutions available to you, so that you too can leverage this tax credit to invest strategically in your business.

This is for informational purposes only. Please consult your auditor for confirmation. First American does not provide tax, legal, or accounting advice.