R&D Tax credit provisions are included in both federal and state of Indiana tax policy, allowing businesses involved in research and development activities to leverage big savings on their annual tax bills.
These credits can be applied against income tax, sales tax, payroll tax and minimum tax, and provide savings of up to 10% and more (if state incentives are included) of annual R&D costs that a business incurs for a given tax year.
Any type of businesses can apply for R&D tax credits as long as its activities or an area of its activity encompasses innovation, i.e., the activity is directed towards generating new and improved product or process. This includes wineries as well.
Producers of alcoholic beverages are actively involved in experimentation activities and are always looking to improve their product and packaging processes. They can often be found performing R&D activities in their wineries, test kitchens, distilleries, breweries or sometimes even on their production floors.
Wineries potentially qualifying R&D activities under R&D tax credit provisions include investing, designing, developing or testing in the following:
- Distillation and fermentation processes
- Product formulations
- Straining or filtration methodologies
- Consistency and shelf life
- Packaging and bottling processes
- Process automation
- Batch prototyping
The money saved through R&D tax credit can be a welcome reduction in the tax burden for winery owners, and it can instead be invested in the business for making valuable improvements such as deploying more manufacturing lines, hiring additional staff or creating similar innovative products and processes.
How much can wineries claim in credit?
That depends on several factors. For instance, how much expenses have been incurred by the business in its R&D activities, how much of the invested amount has been funded by others, how much increment can be expected in R&D expenses over time, etc. etc.
In case, where wineries may also want to claim for the previously unleveraged credits, they can also do that, however the limit is four years. That means you cannot claim for credits which are older than four years.
Interested in knowing your eligibility for claiming R&D tax credit and how can you go about the process?
Reach out, our R&D tax credit specialists in Indiana will be happy to guide you in maximizing your tax savings.
A BONUS read: Why You Should Choose Enguard as Your Tax Consultant