Research and Development Drives Innovation

Research and Development Drives Innovation

Manufacturers can achieve noteworthy results from innovation that’s driven by research and development. Research and development not only results in new products, but also brings updated efficiencies and processes to successful manufacturers regularly. It’s undeniable that the outcomes are critical to the growth of the manufacturing sector in Tennessee and all across the nation.

Tax Credits for Research and Development

Research and development tax credits have been available to manufacturers since 1981. These tax credits help manufacturers design products, refine processes, save money and reduce energy usage. Many people in the manufacturing industry may not be aware that the R&D activities taking place at their facility today are actually eligible for tax credits!

What Types of Activities Qualify for Tax Credits?

As most business owners have learned the hard way, tax credits aren’t widely advertised. It helps to have an expert to point you in the right direction. Understanding tax credits takes a full-time effort from an entire team.

The University of Tennessee Center for Industrial Services (UT-CIS) has staff specialists who can connect you with specialists that can help you dig out research and development tax credits thay you may be missing.  If your research and development efforts meet Federal requirements, there are extensive credits available. The credits can be applied to current taxes due or future tax liabilities.

Even better, they may be applied retroactively for three years in addition to the current year. They may even carry forward for as long as two decades!

Research and Development is Important

The significance of research and development, and by extension, innovation, cannot be accentuated enough. Competition and globalization push both small business owners and large corporate executives to continually reinvent their products and processes to compete. The bottom line is squeezed by changes in customer tastes, pressures of increasing material prices and energy costs. This all requires a creative approach and new ideas driven by good data that only comes from expert research and development.

Examples: Successful Outcomes from Expenditures that May have been Overlooked

  • An injection molder developed new product configurations and designs that led to a reduction in plastic used and increased production of multiple units simultaneously. For these efforts, the company received a tax credit of more than $385,000.
  • A rubber manufacturer worked to develop a new material that would be less permeable and 50 percent stronger than the existing material. The new fabric provided superior weather resistance and improved water-shedding characteristics. This group booked a $90,000 tax credit.

Research and development efforts result in innovation throughout the manufacturing industry. It’s easy to overlook some big tax credits without an extra set of eyes. UT-CIS helps manufacturers solve complex engineering problems and utilize technology to improve productivity and profitability. UT-CIS connects manufacturers with some of the most sophisticated engineering research and development resources in the country. For more information, contact us at 888-763-7439. 

 

About Tennessee Manufacturing

Manufacturing is an integral part of Tennessee's economy. According to the National Association of Manufactuers, the industry accounts for nearly 15 percent of the state's total output and employs 11.4 percent of its workforce. The goal of the Made in Tennessee program is to support the Volunteer State's manufacturing community by raising awareness of their products and providing resources to help them grow. 

 

About the Center for Industrial Services

For 50 years, CIS has assisted manufacturers across the state in the areas of business growth, health and safety and sustainability. CIS also has led economic development efforts by helping existing firms become more competitive, develop new products and markets, and by teaching economic development practitioners new approaches to navigating economic growth. For more on CIS visit www.cis.tennessee.edu