Los Angeles · R&D Tax Credit
If your Los Angeles startup pays engineers or product staff to build or improve software or hardware, it likely qualifies for the R&D tax credit. Staxiom's practice is led by a co-founder who ran EY's West Coast R&D Tax Credit group for 13 years, on fixed fees, never a percentage of the refund.
Federal and California R&D credit studies for engineering and product work.
No contingency or percentage-of-refund pricing, ever.
Documentation and audit support if a claim ever gets questioned.
Los Angeles's engineering-heavy startups, from Silicon Beach media-tech to hardware and aerospace-adjacent companies further inland, often carry more qualifying R&D activity than founders realize, especially pre-revenue companies that assume a credit needs taxable income to be worth claiming. It doesn't: the payroll tax offset lets a pre-revenue company apply the credit against payroll tax instead.
Read the full breakdown of what qualifies, what it's worth, and how to claim it on the R&D tax credit guide, or see how this looks for Orange County and San Diego startups.
On top of the federal credit, California offers its own R&D credit: 15% of qualified research expenses above a calculated base amount, or 24% of basic research payments made to qualified universities and nonprofits. It's nonrefundable but carries forward indefinitely, so it isn't lost if a company doesn't owe enough California tax to use it right away.
One real difference worth knowing before counting on it: California's credit has no equivalent to the federal credit's payroll tax offset, so it only has value once there's actual California income tax liability to offset. A pre-revenue startup should plan around the federal credit first; see the Section 174 treatment and run an estimate before assuming both credits land the same way.
Yes, on top of the federal credit. California's R&D credit is 15% of qualified research expenses above a calculated base amount, or 24% of basic research payments made to qualified universities and nonprofits. It's nonrefundable but carries forward indefinitely, so it isn't lost if a company doesn't owe enough state tax to use it right away.
For the federal credit, yes, a pre-revenue or early-revenue company can apply up to $500,000 of it against payroll tax instead of income tax. California's state credit doesn't have an equivalent payroll tax offset, so the state credit specifically only has value once there's California income tax liability to offset, which is why the federal credit is usually the more immediately useful one for a pre-revenue LA startup.
Different rate (15% of qualifying expenses over a base amount for California, versus the federal Alternative Simplified Credit's roughly 6-14%), no payroll tax offset option in California the way the federal credit has, and it's filed as a separate state claim rather than automatically following from the federal one, even though the two credits are calculated from overlapping qualifying research activity.
Add your revenue and website for a full review, reviewed by a CPA who ran EY's West Coast R&D Tax Credit practice for 13 years.