Forecast Good when it Comes to R&D Spending in the United States

While the past few years have not been particularly positive when it came to R&D spending by businesses in the US, the outlook for 2014 and beyond looks brighter indeed. According to the National Science Foundation, the overall spending when it comes to research & development in the country should increase this year and in the near future.

In the report introduced by the NSF in December of 2013, it was shown that there was an improvement of 5% in overall R&D spending as of 2011, which then amounted to a total of 428 billion dollars. As of 2012, the number rose to 5.7 percent, amounting to a total of 452 billion dollars. The report shows a vast improvement from the years 2009 as well as 2010, when the research & development activities of different companies were at an all time low.

There can be many reasons attributed to this rise in R&D spending by companies in the US, and we can speculate that one of these reasons is the revamping of the R&D regulations and incentives. States like Texas have recently reinstated their R&D tax credits and incentives, therefore encouraging companies based in or operating within the state to increase their R&D activities. These kinds of changes have all added up to a more robust forecast for R&D activities in the coming years.

Where the US stands globally

The US government understands the importance of R&D activities as a drive for growth and innovation. With an improvement in the country’s R&D activities, both in the public and private sector, the US can remain competitive on the world stage. In fact, the US federal government is expected to set aside approximately 123 billion dollars for R&D funding this year alone. This is a 1.5% increase from previous years, which indeed bodes well for many companies already engaged in R&D activities or those planning to immerse their enterprises in R&D. All in all, the US still remains the largest R&D investor in the world today.

How your enterprise can benefit

It has long been known that the pharmaceutical industry has always been a big player in research & development in the US. But other companies from different industries can also benefit from the government’s R&D incentives, as long as they have been proven to incur expenses which are related to qualified research & development activities.

Each state also has its own form of R&D incentive, so companies operating in or based within a particular state would need to know what these credits and incentives are. Although there may be some kind of ‘gray area’ as to what qualifies as R&D spending (for instance, what the difference is between a prototype and a production model, or what constitutes an experimental process), the changes set forth by the government should make these ‘gray areas’ clearer. This is to avoid any disputes in the future.

Some companies which are now engaged in a dispute with the government regarding their R&D claims often become confused because of uncertainty regarding documentation and cost deduction. However, companies can avoid this confusion (and any resulting case or dispute) by making it a point to confer with expert R&D tax specialists before they begin with their R&D plans and activities. If you would like to benefit from the government’s revamped R&D tax credit and incentives, contact the specialists at Swanson Reed today.

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