R&D Tax Credit Calculator
Three brackets, one instant range. No website, no wait.
The federal R&D tax credit rewards qualifying research spend — engineering and product work that meets the IRS's four-part test — with a credit against tax owed: 6% of qualified research expenses with no R&D history to base the calculation on, or 14% of QRE net of a base amount once there's an established program — which nets out closer to 7% of current-year QRE for a program with roughly steady spending, and only approaches 14% for one growing fast relative to its own recent history.
A team of 8 engineers averaging $125,000 in salary, spending about 37.5% of their time on qualifying R&D work, has roughly $375,000 in qualified research expenses — putting the estimated credit range between about $22,500 and $26,250 for a first-time or steady-spend claim.
For the full breakdown — who qualifies, what expenses count, the payroll tax offset for pre-revenue companies, and answers to the most common questions — see the complete R&D tax credit guide. Working out of Southern California? See how the federal and California credits stack for Orange County and Irvine, Los Angeles, and San Diego startups.
How the calculator gets to its number
- Estimate qualified research wages. Headcount × average salary × share of time on qualifying R&D, using the midpoint of each bracket you pick.
- Low end: 6%. The Alternative Simplified Credit rate when there's no prior R&D spend to base the calculation on.
- High end: 14% net of a base amount. The base is 50% of the prior three years' average spend. For roughly steady spending, that's 14% of half your current wages, about 7% overall.
Worked examples
| Team | People | Avg salary | Time on R&D | Qualified wages | Estimated credit |
|---|---|---|---|---|---|
| Early team | 3 | $87,500 | 85% | $223,125 | $13,388 – $15,619 |
| Seed-stage product team | 8 | $125,000 | 37.5% | $375,000 | $22,500 – $26,250 |
| Series A engineering org | 15 | $175,000 | 62.5% | $1,640,625 | $98,438 – $114,844 |
What this estimate leaves out
The calculator counts wages only, the biggest piece for most software and product teams. A real claim can also include supplies used in development and testing, cloud and computing costs tied to development environments, and a portion of payments to U.S. contractors doing research on your behalf. Most states have their own R&D credit on top of the federal one. And if your company is pre-revenue, the payroll tax offset is what turns the credit into cash. For how R&D costs are deducted, separate from the credit, see Section 174.
R&D tax credit calculator FAQ
How does this R&D tax credit calculator work?
It estimates qualified research wages as headcount times average salary times the share of time spent on qualifying R&D, using the midpoint of each bracket you pick. The low end of the range applies the Alternative Simplified Credit's 6% first-year rate. The high end applies 14% to wages net of a base amount equal to half of that spend, the steady-spending case, which works out to about 7% of current-year wages.
What is the 80% rule for the R&D credit?
If at least 80% of an employee's time in a year goes to qualified research, the IRS treats substantially all of their work as qualified, so 100% of that person's wages can count rather than a pro-rated share. It's why the time-on-R&D bracket matters so much for engineers who spend most of their day building.
How much do you get from the R&D tax credit?
Under the Alternative Simplified Credit it generally lands between 6% and 14% of qualified research expenses, and closer to 7% for a program with roughly steady spending. For example, 8 people averaging $125,000 who spend about 37.5% of their time on qualifying work have roughly $375,000 in qualified wages, for an estimated credit of about $22,500 to $26,250.
Can a pre-revenue startup use the R&D credit?
Yes. A qualified small business, generally under $5 million in current-year gross receipts and no more than five years of gross receipts history, can apply up to $500,000 a year of the credit against the employer portion of payroll taxes instead of income tax. That turns the credit into usable cash for a company that doesn't owe income tax yet.
How accurate is a calculator estimate?
It's directional. This one counts wages only and ignores supplies, cloud and computing costs tied to development, and contract research, all of which can add to a real credit. The real number depends on documented activities that pass the four-part test and on your actual R&D spending history, which is what a full study checks against your books.
Want the real number, not a bracket estimate?
Add your revenue and website for a full R&D credit review, checked against your actual books.