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R&D tax credit
- QREs person by person
- Simplified credit and 6% rule
- Payroll offset test
Opens in Excel, Google Sheets and Apple Numbers.
Free tools · Tax, US
Free R&D tax credit calculator, an estimate of your federal credit.
Excello's free R&D tax credit calculator estimates the US federal research credit with the alternative simplified method, and whether a young company can use it against payroll tax.
Enter this year's qualified research expenses and the last three years' totals. The Excel version builds the figures person by person.
Free. No sign-up. A US federal estimate for planning.
- Calculator
- Country US
- Method simplified
- Excel included
- Price free
Estimate your research credit
The calculator
The example is a software startup in its third year of revenue, with five people doing development and two outside contractors.
Your estimate, US federal
- Research credit
| Qualified wages | |
|---|---|
| Supplies | |
| Rented or leased computers | |
| Contract research (65%) | |
| Prior years ÷ 6 | |
| QREs above that, × | |
| Usable against payroll tax |
Meets the qualified small business test for the payroll offset.
How do you calculate R&D tax credit? Four steps
The method
-
Step 01
Add up this year's QREs
Qualified wages, supplies, rented computers and 65% of contract research.
-
Step 02
Take the prior three years
Add their QREs and divide by six: half of the three-year average.
-
Step 03
Apply the rate
14% of this year's QREs above that amount, or 6% of all of them if a prior year had none.
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Step 04
Choose the election
The reduced credit under section 280C keeps 79% of the credit.
Credit = 14% × (this year's QREs − prior three years' QREs ÷ 6)
If any prior year had no QREs: credit = 6% × this year's QREs
This is the alternative simplified credit, Section B of Form 6765, which needs only the last three years of research spending. The regular credit, Section A, works from a fixed-base percentage built from earlier gross receipts and research spending.
Source: IRS Form 6765 (Rev. December 2024), Section B, checked September 2026
R&D tax credit calculation example
Worked through
| Role | Wages | Research time | Qualified |
|---|---|---|---|
| Chief technology officer | $180,000 | 80% | $144,000 |
| Senior engineer | $160,000 | 90% | $144,000 |
| Engineer | $140,000 | 90% | $126,000 |
| Engineer | $130,000 | 100% | $130,000 |
| Product designer | $112,000 | 50% | $56,000 |
| Total | $600,000 |
| Qualified wages | $600,000 |
|---|---|
| Supplies | $20,000 |
| Rented or leased computers | $30,000 |
| Contract research, $150,000 × 65% | $97,500 |
| QREs this year | $747,500 |
| Prior three years, $1,150,000 ÷ 6 | $191,666.67 |
| Excess × 14% | $555,833.33 × 14% |
| Research credit | $77,816.67 |
| With the reduced credit election | $61,475.17 |
Had the company spent nothing on research in one of the three prior years, the 6% rule would give $44,850. With $2,400,000 of gross receipts in its third year of receipts, it also passes the qualified small business test, so the credit could go against payroll tax.
Figures are illustrative and calculated by the template's own formulas.
Federal R&D tax credit calculation: what counts
The four-part test
Test one
Deductible research
The costs are treated as domestic research or experimental expenditures under section 174A.
Test two
Technological in nature
The work sets out to discover information that is technological in nature.
Test three
A business component
The results are meant to help develop a new or improved product, process, software or formula.
Test four
A process of experimentation
Substantially all the activities test alternatives to improve function, performance, reliability or quality.
Source: Instructions for Form 6765, checked September 2026
The payroll tax offset for young companies
No profit needed
Source: Instructions for Form 6765, payroll tax credit election, checked September 2026
The R&D tax credits calculator in Excel
The file
Clean records behind a credit claim
Where Excello fits
Frequently asked questions
What is the R&D tax credit?
The R&D tax credit is a US federal credit, under section 41 of the tax code, for businesses that pay for qualified research. It is claimed on Form 6765 and reduces income tax or, for some young companies, payroll tax.
How do you calculate the R&D tax credit?
With the alternative simplified method, add up this year's qualified research expenses and subtract one sixth of the prior three years' total. Then take 14% of what is left. If any of those years had no expenses, use 6% of this year's total.
What counts as a qualified research expense?
Four kinds of cost count as qualified research expenses. They are wages for people doing qualified research, supplies and rented or leased computers used in it, and 65% of what you pay research contractors. The research itself must meet the four-part test.
Can a startup with no profit use the R&D credit?
Often, yes. A qualified small business, with gross receipts under $5 million and receipts in no more than five tax years, can elect to use up to $500,000 a year of the credit against the employer's social security tax.
What is the 6% rule for the R&D credit?
The 6% rule applies when a business had no qualified research expenses in one of the three prior tax years. The simplified credit is then 6% of this year's expenses, which would be $44,850 in the example.
What is the section 280C reduced credit?
It is an election at the top of Form 6765 that keeps 79% of the credit. Whether it suits you depends on the rest of your tax position, so decide it with whoever prepares your return.
Is this R&D tax credit calculator free?
Yes. The calculator and the Excel template are free, with no sign-up needed. They give an estimate from the IRS form; the claim itself is prepared with your tax preparer.