Federal Research and Development (R&D) Tax Credit

The Federal Research and Development (R&D) Tax Credit is a tax credit that rewards companies to invest in innovation in the United States. Businesses with qualified R&D activities may be eligible to claim unlimited federal income tax credit for costs related to their R&D. When you use Gusto’s R&D Tax Credit Service, we use the company info you’ve already provided to make the R&D tax credit process easier.

Businesses may use the tax credits against their current income tax liabilities or carry forward those credits to use in future tax years. A Qualified small business (QSB) (less than five years of gross revenue and less than $5,000,000 in gross revenue within the tax year) may be eligible to use up to $500,000 in R&D tax credits (depending on the tax year) per year to pay the company portion of your payroll taxes, and do so directly in Gusto. These QSBs may use this benefit for up to 5 years. Businesses may carry forward any unused tax credits to future tax years.

View our blog entry for additional information on how to identify and claim your R&D tax credits.