How did we get here? Well, there are many parts to this story, but from a production standpoint, it all centers around innovation.
The food manufacturing industry is no stranger to innovation. But what many in the industry may be a stranger to is the R&D Tax Credit, which provides additional incentives beyond innovation and advancing the latest trend—or hitting on the next big one. Food manufacturers can earn valuable tax credits for work on food recipe formulation, including activities taken to create foods like The Impossible Burger and Beyond Fried Chicken. Recipe formulation often qualifies for the R&D Tax Credit through qualifying expenses. In general, qualifying expenses will fall into three categories:
Food recipe formulation is just one of an extensive list of activities in food manufacturing that can qualify for the R&D Tax Credit. Regardless of the size or scope of your food manufacturing business, you undoubtedly spend a lot of time researching and testing new products and processes. These are precisely the activities the credit was designed to incentivize!
So even if you aren’t getting in on the meatless meat craze, you’re likely spending valuable resources on many of the following food manufacturing activities that could qualify for valuable tax benefits:
Depending on the circumstances, all of these activities could be considered for the R&D Tax Credit. It’s important to keep detailed documentation relating to these projects in order to use them to potentially offset state and federal tax liabilities. And as with any R&D Tax Credit, they must pass the Four-Part Test.
The R&D Tax Credit can be complicated. Always check with an expert who can help you uncover opportunities and navigate the process.