R&D tax credit calculator

How this estimate works

The calculator estimates your federal credit under Section 41 of the tax code. Here is the math, step by step.

Step 1: add up qualified research expenses

• W-2 wages. Pay for US employees doing qualified work, multiplied by the share of their time spent on it. This is the biggest line for most startups. What work qualifies
• US contractors, at 65 percent. The calculator leaves these out to stay simple. If you pay US contractors for development, add 65 cents per dollar to your qualified expenses. The work must happen in the US, and you must keep the risk and the rights to the results.
• Cloud and compute. The code includes amounts paid for the right to use computers in qualified research. That is the basis for counting AWS, GCP, and GPU costs tied to development and testing. The IRS has not issued cloud-specific rules, so a defensible claim ties these costs to research work.

Step 2: apply the credit rate

Form 6765 offers two methods. The regular credit pays 20 percent of qualified expenses above a base amount tied to your company's history. It requires records most startups don't have.

Nearly every startup uses the Alternative Simplified Credit instead. It pays 14 percent of qualified expenses above half your average spend for the prior three years. If you had no qualified expenses in the prior three years, it pays a flat 6 percent.

The calculator assumes 8 percent, the middle of the typical 6 to 10 percent range. First-time claimants land at 6 percent. Companies with prior claims and steady spend land near 7 percent. Fast-growing teams land higher, and the statutory ceiling is 14 percent. Most companies also make the Section 280C election, which trims the credit by about a fifth in exchange for keeping the full deduction. The number you see above is typical, not a guarantee.

What this page is not

This is a planning tool, not tax advice and not a filing position. Claimship computes the exact credit from payroll records and your actual work history. Your CPA reviews the study and files it.

Sources: 26 U.S.C. §41 and the IRS Instructions for Form 6765, Rev. December 2025.

Not profitable? You can still get cash.

Most tax credits only matter if you owe income tax. The R&D credit has an escape hatch for startups. Qualified small businesses can elect to apply up to $500,000 of the credit per year against payroll taxes instead.

The test has two parts, set by Section 41(h):

• Gross receipts under $5 million in the credit year.
• No gross receipts in any year before the five year window ending with the credit year. In plain terms, your first revenue came within the last five years.

Here's how the cash arrives. Your CPA files Form 6765 with your return and makes the election. The credit then offsets the employer share of Social Security taxes, up to $250,000 per quarter, and any remainder offsets Medicare taxes. Unused amounts roll to the next quarter. You see it as a smaller payroll tax bill, usually starting the quarter after you file.

One warning: the election is not automatic at your payroll provider. Someone has to tell Rippling or Gusto the credit exists. How to claim the payroll offset and actually collect