Many business leaders assume R&D tax credits are reserved for large corporations with labs, scientists, or groundbreaking inventions. In reality, R&D credits are often generated through everyday business activities — and many companies are surprised to learn they already qualify.
As guidance continues to evolve and eligibility expands across industries, now is a good time to revisit what counts as R&D and whether your organization is leaving money on the table.
R&D Credits Aren’t Just for “Research”
At a high level, R&D tax credits reward companies for investing in improvement and problem-solving. If your team is working to develop, enhance, or optimize products, processes, software, or systems — especially where the outcome isn’t certain — those efforts may qualify.
Importantly, R&D credits are not limited to net-new inventions. Iterative improvements, efficiency gains, and testing alternative approaches often meet eligibility criteria.
What Types of Activities Can Qualify?
While each claim is evaluated individually, qualifying activities generally involve:
- Improving or developing products, processes, or software
- Solving technical or operational challenges
- Testing multiple approaches to determine the best solution
- Experimenting to increase efficiency, scalability, or quality
Many companies perform this type of work as part of normal operations — without realizing it may qualify for tax credits.
What Can This Look Like in Practice for Your Industry?
Software & Technology
- Developing new features or internal tools
- Improving system performance, scalability, or security
- Testing different technical approaches to resolve limitations
Even incremental development work may qualify when technical uncertainty exists.
Manufacturing
- Designing or refining product prototypes
- Improving production workflows or reducing waste
- Testing new materials, equipment, or manufacturing methods
Process improvements are often a significant, and overlooked, source of R&D credits.
Food & Beverage
- Developing new formulations or reformulating existing products
- Improving shelf life, texture, or nutritional profiles
- Testing ingredient substitutions or production methods
Food science and process experimentation frequently qualify, even outside of formal lab environments.
Medical Device
- Designing and testing device prototypes
- Improving durability, performance, or manufacturability
- Iterating designs to meet safety or regulatory requirements
Structured testing and iteration are key drivers of eligibility in this space.
Healthcare
- Developing internal systems or operational tools
- Automating scheduling, billing, or data workflows
- Improving efficiency through technology or process redesign
While direct patient care may not qualify, the systems that support it often do.
Other qualifying industries include:
Aerospace, Electronics, General Manufacturing, Software Development, Agriculture, Engineering, Hardware Development, Telecommunications, Automotive, Food Science, Pharmaceuticals, Waste Management, Chemicals, Forestry ,Semiconductors, and more…
If your business is investing time and resources into improving products, processes, or technology, you may be eligible for R&D tax credits, even if you’ve never claimed them before.
Luxent partners with a company that specialized in R&D Tax Credits, The Davis Group. The Davis Group specializes in helping businesses identify, document, and claim R&D tax credits across a wide range of industries. Their team conducts comprehensive R&D studies and provides full audit defense support — helping companies pursue credits with confidence.
The Davis Group offers a free preliminary analysis to help estimate potential benefits and determine eligibility. Contact [email protected] for your free analysis.
About The Davis Group
The Davis Group specializes in Access to Capital. Whether it be Merger & Acquisitions, Exit Planning, Creating Financial & Operational Efficiencies or generating Tax Credits. Their goal is to bring value to their clients by providing quality service, building long-term relationships, and ensuring a high standard of professional ethics.
