1. People on qualified research
Paste straight from a spreadsheet (tab separated) or type commas. Use W-2 box 1 style wages. Only the share of time spent on qualified research counts, and each share needs a record made at the time.
Contractor cost is counted at 65%. Cloud hosting, rent and general overhead are not entered here.
2. History and size
Assumptions used (stated, not verified for your return): regular credit 20%, simplified credit 14% (6% with no history), 65% of contractor cost, payroll offset up to $250,000 against employer Social Security plus $250,000 against employer Medicare tax for a company under $5 million of receipts with first receipts within five years, Social Security wage base $184,500. The fixed-base percentage for a company that is more than a few years old is computed from history; enter your own if you have it.
Paste your people and click Estimate.
Result (illustrative)
People counted
| Name | Wages | Time on research | Qualified wages |
|---|
What this does not cover
- Whether the work qualifies. The four-part test (a permitted purpose, technological in nature, eliminating uncertainty, a process of experimentation) is a facts question. This tool takes your time shares as given.
- Documentation. Credits are lost in exams for missing contemporaneous records, not for arithmetic. Keep timesheets, tickets, design notes and test results.
- Simplified base rules. The regular method's fixed-base percentage is entered, not derived, and controlled-group, short-year and acquisition rules are not modelled.
- Payroll offset timing and limits. The offset is elected on the return and used against payroll tax after it is filed; the payroll-tax capacity here is estimated from the wages you enter.
- Interaction with other returns. State credits, the alternative minimum tax, the expensing of domestic research costs under Section 174A and pass-through allocation are not modelled.
- Point-in-time assumptions. Limits and rates are stated for 2026 and change.
Common questions
How much is the federal R&D tax credit worth to a startup?
Roughly 6% to 14% of qualified research spending under the simplified method, or at most 10% under the regular method, before the Section 280C adjustment. A startup with no history in the prior three years gets 6% of qualified spending. For a team of three engineers spending most of their time on qualified work that is often in the tens of thousands of dollars a year.
Can a startup with no income tax use the R&D credit?
Yes, if it is a qualified small business: under $5 million of gross receipts this year and first gross receipts within the last five years. It can elect to apply up to $250,000 against employer Social Security tax and up to $250,000 more against employer Medicare tax, so a company that pays no income tax still gets cash value through lower payroll tax. The election is made on the return and applies to payroll tax after it is filed.
What counts as a qualified research expense?
Wages for employees doing, supervising or directly supporting qualified research (only the share of time spent on it), supplies used in that research, and 65% of amounts paid to US contractors for it. Overhead, rent and general administration do not count. Whether an activity qualifies turns on the four-part test and on documentation, which a tax professional has to judge.
Does software development qualify for the R&D credit?
Often, yes, when the work aims to resolve technical uncertainty through experimentation grounded in computer science or engineering. Software sold or licensed to customers is treated as ordinary product development. Software built mainly for your own internal use must also pass a high-threshold-of-innovation test, so it is examined more closely.
What is the difference between the regular and simplified credit?
The regular credit is 20% of qualified spending above a base tied to average gross receipts (never less than half of the current spending). The simplified credit is 14% of qualified spending above half of the prior three-year average, or 6% of current spending when any of those three years had none. This tool computes both and shows the larger.
Is this tax advice or a substitute for an R&D credit study?
No. It is an illustrative estimate from stated assumptions. It cannot tell whether your activities qualify, whether your records would hold up, or how the credit interacts with your other returns. Use it to decide whether a study is worth commissioning, and have a qualified tax professional prepare Form 6765.