Building Materials R&D Credit

The R&D Tax Credit is a powerful incentive designed specifically for the work building materials manufacturers do every day. It rewards the technical problem-solving inherent in developing new products and formulations, turning your firm's innovation into a significant tax refund.

 

Eligibility doesn’t require inventing a revolutionary new material. Instead, the credit rewards your process of systematic trial-and-error to arrive at a final product. If your team experimented with different formulations, production methods, or materials to resolve technical uncertainty and meet specific performance goals, you were likely performing qualifying R&D.

 

Qualifying activities are present throughout the entire product and process lifecycle:

 

Formulation & Materials Science

This foundational stage involves creating and testing the core composition of your products.

• Experimenting with new chemical formulations or raw material mixes to achieve specific properties (e.g., strength, weight, or flexibility).

• Developing and testing materials for improved performance, such as enhanced fire-retardancy, acoustic properties, or moisture resistance.

• Evaluating new bio-based, recycled, or composite materials to meet sustainability goals, improve LEED ratings, or reduce cost.

 

Product & Systems Development

This phase focuses on engineering the product itself to solve complex technical challenges.

• Prototyping and testing new product designs, such as a new interlocking paver system, roofing shingle shape, or window assembly.

• Developing new or improved product features, like enhanced insulating (R-value) properties for insulation or better load-bearing capacity for engineered wood.

• Testing how new products or materials integrate with existing building systems to ensure compatibility and performance (e.g., a new siding with a new moisture barrier).

 

Manufacturing Process Improvement

The technical work required to meet modern production, efficiency, and quality standards.

• Developing and testing new manufacturing processes, such as faster curing times for concrete, improved extrusion methods, or new molding techniques.

• Engineering and testing new automation or robotic systems on the production line to improve consistency, reduce waste, or increase throughput.

• Designing and implementing new quality control tests and procedures to validate the performance and consistency of products made with new formulations.

 

From the lab to the production line, the building materials lifecycle is filled with qualifying activities that can translate into valuable tax savings.