The chemical industry is one of the main export sectors of the US manufacturing industry: representing 13% of chemical product shipments, the US became the second largest chemical producer in the world in 2022, and can be also considered a constantly expanding market, being the second largest manufacturing industry in the country.
The more than 13,000 companies in the sector produce 70,000+ products, with R&D spending around $12.9 billion in 2022, according to Statista. With these expenses, and a history of strong enforcement of intellectual property rights, the chemical industry is responsible for a significant portion of R&D patents granted in the United States.
Strong product identification and quality, access to low-cost natural gas, a highly skilled workforce, world-class research centers, protection for intellectual property, and a robust regulatory system make the United States a competitive home for chemical firms from all over the world.
R&D Tax Credit
The Research and Development (R&D) Tax Credit is a federal incentive for businesses to invest in R&D activities in the US, providing companies with dollar-for-dollar saving for carrying out innovation-related activities.
Credit is available for the most diverse sector, if it meets the criteria by which the incentive classifies “qualified research”, that is: research or experimental expense within the scope of IRC §174, research activities that constitute elements of a process of experimentation related to new or improved functions, among others.
How does this Tax Benefit work?
- R&D Tax Credits reward companies for investing in technology and innovation.
- R&D Tax Credits can be recovered from up to 3 prior years and carry forward up to 20 years.
- Companies that develop new, or improve existing, products, processes, and software may be eligible for R&D Tax Credits.
- Our team works directly with clients to identify eligible R&D activities and expenses and works alongside your trusted tax professional to maximize your R&D Tax Credits.
- Qualifying Activities
- In the chemical industry, R&D activities can be very varied, as they involve the creation of new compositions and production processes, using a wide range of raw material and generating the most varied types of products through chemical engineering. So, there is a wide range of qualifying activities, including:
- Developing chemical formulations with enhance performance and safety;
- Improving manufacturing processes to reduce waste or increase energy efficiency;
- Exploring the use of green solvents and solvent-free processes;
- Developing digital solutions to optimize the operation of chemical manufacturing processes;
- Investigating the application AI for predictive modeling off chemical reactions and material properties;
- Developing analytical methods to detect and quantify impurities;
- Conducting stability studies to assess the shelf life and degradation of chemical products under different storage conditions.
If some of your expenses may be unidentified R&D activities, they could earn the company a tax credit of 7% to 10% of its R&D expenses.
How can we help you?
We specialize in helping companies finance innovation and secure funding for their Research and Development (R&D) activities through the comprehensive execution of R&D Tax Credits. With more than 1,800 qualified employees, counting on specialists from different fields, committed to supporting companies of all sizes and in all sectors of activities. With our expertise, FI Group specialists can support your company in identifying qualified activities.
