Research and Development Tax Credit: Chemicals and Plastics

By November 9, 2017 April 20th, 2018 R&D Tax Credits
The chemical and plastics industry is a strong contender for the Research and Development (R&D) Tax Credit. However, many companies are unacquainted with the scope of the benefit and don’t take full advantage of it. In recent years, the IRS has broadened the spectrum as to what qualifies as research and development and thus companies should take a second look at this strategic financial opportunity. Companies in the chemical and plastic industry need to not only look into the R&D department, but every other department since not all qualifying R&D activities take place in traditional R&D laboratories. Many individuals involved in these activities may not necessarily work at a laboratory or in a chemist group and consequently are overlooked for R&D tax credit purposes.

Most of the activities conducted in chemical or plastic companies involve extensive experimentation and testing to ensure product quality and process efficiency. The following are some common practices within the industry: formula, method and process development, scale-up processes, and analytical testing of experimental or improved products. These activities will definitely fulfill the IRS Four-Part test and thus are considered qualified research activities (QRAs).

The following are examples of plastic injection molding activities that are eligible for the R&D tax credit study:

  • Mold and tooling – design, prototyping, fabrication and testing.
  • Engineering and process development.
  • Material application, temperature, pack and hold, and gate seal study.

The following are examples of chemistry innovations eligible for the R&D tax credit study:

  • Development of new testing methods.
  • Designing new drugs and chemical compounds.
  • Conducting tests to satisfy regulatory requirements.
  • Developing devices for testing.
  • Developing new applications for existing chemicals.
If your company conducts activities within the chemical, oil and gas, polymer, and pharmaceutical industry there is a strong likelihood that your company can take advantage of the Research and Development Tax Credit. Visit the Indago website or email us at for more information about qualifying for the R&D Tax Credit.