Welcome to Tax Credit Hero

What is the R&D tax credit?

It's a federal tax credit that rewards businesses for developing new products or processes, improving existing ones, or solving technical problems. Unlike a tax deduction which reduces taxable income, a tax credit reduces a taxpayer's income tax dollar for dollar. Most companies that qualify don't even know it!

Is this only for large corporations?

Not at all. Many startups and small businesses qualify, and in some cases the credit is even more valuable for smaller companies. There are provisions specifically designed for early-stage businesses that aren't yet profitable.

We're not profitable yet. Can we actually get value from this credit?

Yes, and this is one of the most overlooked opportunities for startups. If your business is a qualified small business, even if you owe zero income tax, you can apply your R&D credits against future payroll taxes. That means real cash savings, not just a future tax benefit.

What is a Qualified Small Business (QSB)?

A Qualified Small Business is a company that meets two criteria set by the IRS. First, your business must be less than five years old. Second, your gross receipts for the current year must be under $5 million. Gross receipts means your total revenue, not your profit, so pre-revenue companies can qualify too. If you meet both requirements, you may be able to apply your R&D credits against your payroll taxes instead of income taxes, which is a significant benefit for startups that aren't yet profitable. The QSB designation exists specifically to make the R&D credit accessible to early-stage companies that wouldn't otherwise be able to use it.

Does my state offer an R&D tax credit too?

Many do. Over 35 states offer their own R&D tax credits in addition to the federal credit. The rules, rates, and qualifying expenses vary by state, but in many cases you can stack a state credit on top of your federal credit for the same qualifying work. Some states even offer refundable credits, meaning you can get cash back even if you don't owe state taxes. If your business operates in multiple states, you may be able to claim credits in more than one. It's one of the most commonly missed opportunities we see.

Do I have to be a tech company or have a lab to qualify?

No. The credit applies to many industries, including manufacturing, construction, food and beverage, agriculture, engineering, and software. If your team is solving problems, improving processes, or building something new, there's a good chance some of that work qualifies.

How much money are we talking about?

More than most businesses expect. On average, companies see 7 to 10 cents in federal R&D tax credits for every qualified dollar spent. If your state also offers an R&D credit, that can increase to 12 to 16 cents per qualified dollar. For a business spending $500,000 a year on qualifying work, that can equate to $35,000 to $50,000 in federal credits alone, and up to $60,000 to $80,000 when a state credit is included. These are dollar-for-dollar reductions in what you owe, not just deductions.

What counts as a qualifying expense?

Mostly wages for employees doing the work, contractor costs, and supplies used during development. If your engineers, developers, or technical staff are spending time solving problems, their salaries likely count.

Why is right now a particularly good time to pursue this credit?

A major tax law called the One Big Beautiful Bill Act (OBBBA) was signed in July 2025 and made several changes that work in your favor: - Domestic R&D costs can now be fully deducted in the year they're incurred, rather than spread over five years. This improves your cash flow significantly. - Any unamortized R&D costs from 2022 through 2024 can be deducted all at once in 2025, or split across 2025 and 2026. That means there may be money sitting in prior years you haven't claimed. - Small businesses with under $31 million in average gross receipts may be able to amend prior returns to expense R&D costs retroactively.

Are there deadlines I should know about?

A few important ones. The R&D credit is claimed on your tax return, so normal tax deadlines apply, including extensions. If you've never claimed the credit before, you can generally go back and amend up to three prior years of tax returns to capture credits you missed, but you need to act within the statute of limitations, so those windows close on a rolling basis every year you wait. For small businesses, defined here as companies with average gross receipts under $31 million, there is an additional and more urgent deadline. Businesses must make the election for retroactive relief by July 4, 2026, creating a limited window to capture potentially substantial refunds. This applies to R&D expenses from 2022 through 2024 that were subject to less favorable rules and may never have been fully deducted. If you've been putting this off, now is the time to act.

What if we already filed?

You may still be able to claim it. You can generally amend up to three prior years of tax returns to capture R&D credits you never claimed, as long as you're within the statute of limitations. For small businesses with average gross receipts under $31 million, there is also a limited window to claim retroactive relief on R&D expenses from 2022 through 2024, but that election must be made by July 4, 2026. Amended returns can mean real money back in your pocket. One important note: the payroll tax offset available to qualified small businesses can only be elected on an original, timely-filed return. Amended returns cannot be used to claim that particular benefit, which is one more reason not to wait.

Are reporting requirements getting stricter?

They are starting to soon. A new section of the IRS form used to claim the credit is optional for tax year 2025 but will be mandatory for most businesses starting in 2026. That means the documentation you need to support a claim is becoming more detailed. Getting organized now makes the process much easier.

How do I know if I've been leaving money on the table?

That's exactly what Tax Credit Hero is for. You can get started on your R&D credit study for free, no credit card required. Once the study is complete, you'll receive an estimate of what your R&D credit will be. At that point, you decide whether you want to pay for the deliverables, which include the completed Form 6765. Since the R&D tax credit is claimed on your tax return, the deliverables will need to be sent to your tax preparer.

What does it cost to work with Tax Credit Hero?

We offer a simple, fixed-fee structure. The federal R&D credit study is $1,600, and if you want to include a state R&D credit study, that's an additional $800. There is no upfront cost. You complete the study for free and only pay if you decide you want the deliverables.

Is this legitimate?

Yes. The R&D Tax Credit has existed since 1981 and is part of the Internal Revenue Code.

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