How much of my R&D costs can I recover?

The Federal portion is approximately 10% of eligible expenditures that can be used to offset Social Security taxes up to $250,000/ year, income taxes, or AMT.

The State portion differs from state to state. California is approximately 7.5% of eligible expenditures, but it can only be applied against income taxes and may be carried forward indefinitely.

New York State offers a refundable R&D tax credit of 50% of the Federal R&D credit up to six percent of the R&D expenditures in New York State.

A startup with $500,000 of eligible software engineering expenses, could receive an R&D credit of $50,000 or more, while a qualified small business with over $2.5 million in eligible expenses could receive a credit of $250,000 and use the whole amount to offset Social Security taxes in the fiscal year.