R&D Tax Credits for Software Development Companies

Software Development Companies

Two women working on a laptop at workSoftware development companies that invest in research activities to improve software programs and systems often qualify for R&D credits. Research performed within a computer software project for the purpose of achieving an advancement in computer science or information technology often qualifies for the lucrative credit.

Qualifying companies are able to use R&D tax credits towards offsetting costs spent during the developmental process.

Qualifying Research Activities Include

  • Programming software source code
  • Designing and developing new software
  • Establishing electronic interfaces and functional relationships between various software modules
  • Conducting requirements, domain, software elements or scope analysis for a new functional software enhancement
  • Developing new or improved technologies

The qualifying research activities being performed must be done through the technological layer of the computer software, and not done in an effort to advance the science or technology of the software. Most software companies follow similar software development life cycles.

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