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Software is dramatically transforming every area of modern life. In the span of a few decades, software has grown from mere projects of curiosity within the world's largest firms to having a dominant position in virtually every industry and field. This dominance has led to equal levels of competition, as seemingly modest differences in the quality of the code transform into enormous variances in the output. For all of these reasons, software has a special place in the R&D Credit ‘spectrum,' and InnovaTax has extensive history with software development, varied coding systems / languages, and development procedures.

Many of the activities that software companies engage in can be used to generate tax benefits, including:

  • Marketed Software Products / Apps

    Software features that are sold, licensed, or otherwise made commercially available, are among the most highly benefitted industries by the R&D Credit. The basic additive nature of coding lends itself to the general requirements of the R&D Credit well.

  • Adapting Applications

    Many software users have different or varying needs from core software platforms. Modifications and additions to these systems often qualifies.

  • Firmware

    Most consumer goods today come with firmware that controls and manages it. This firmware has expanded dramatically in recent years, and many products are themselves controlled by powerful computer systems.

Case Study

Internal Use

Higher Expectations: Probably the most important exception for software is known as "internal use." Software designed and used exclusively by a company must pass a higher test. In this case, Software Co. avoided this by licensing and marketing publicly.


Software is an incredibly high-performing industry for the R&D Credit. Geology Co. assisted petroleum companies with chemical / engineering analysis and predictions. To enhance those services, Geology Co. developed a software platform to analyze huge amounts of geological and chemical data. To evaluate the resulting patterns, they developed a series of visualization and prediction tools, which customers used to anticipate conditions, and plan their response. In an odd twist of fate, the software began to overtake the traditional services, but either way, the company's many efforts in developing technical services

Credit Estimator

Credit Estimator
* Industry Averages are historical IRS averages, representative of actual results compiled by the IRS (based industry NAICS code.)  Estimates of QREs and credits are approximations, and actual results will vary based on actual client costs and qualifications.


This is an estimation only and should not be used on your taxes.  All conclusions involved in this calculation are based on the accuracy of the information provided by the end user.  This calculation utilizes historic information and statistical analysis to determine an industry average combined with a mathematically derived constant for the calculation of State and Federal Benefits.  InnovaTAX cannot and will not warranty the results of this estimation and any party using the estimated figure in place of a genuine calculation does so at its own harm and with full warning from EEPB InnovaTAX that such action is improper.  Further, the estimator developed by InnovaTAX is the intellectual property of InnovaTAX and cannot be used in any other manner than on this website or by InnovaTAX employees.  Due to the fact that the information contained within the calculator is based on industry averages, the results will vary from situation to situation and might be above or below the stated figure.  Consult your tax advisor or EEPB InnovaTAX for further information.


The information used for the calculation of this credit is based on the Internal Revenue Code and Regulations.  EEPB InnovaTAX gathered information from State legislatures and taxing authorities for each state and relied upon the information provided by the state to develop this estimator.  The definitions of activities that qualify for tax credit are based on the definitions set out in the Internal Revenue Code and by each state authority.

EEPB InnovaTAX maintains this website on a regular basis and makes its best effort to update the estimator but does not warrant the calculations involved in the estimator to contain current law at all times.


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EEPB InnovaTax, LLC is a State of Texas registered tax adviser located in Houston, TX.

EEPB InnovaTax specializes in Research and Development income tax consultation; Tax advisory services; Tax and taxation planning advice, information and consultancy services; and Tax consultation.

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