Other Incentives

  • Develop new or improved product formulations to enhance flavor or increase nutritional content
  • Create new or improved food manufacturing processes to meet federal, state, and local health guidelines
  • Produce pilot batches of foods or beverages for shelf life and stability analysis

199 DPAD

IRC Section 199 Domestic Production Activities Deductions (DPAD) represents a valuable tax incentive for businesses that perform domestic architecture, engineering, and construction services.  Eligible engineering and architecture services include consultation, investigation, evaluation, planning, design and supervision of construction. Construction activities must be domestic and can include residential or commercial building improvements as well as infrastructure projects. Generally, the tax deduction can be as much as 9% of taxable income.

  • Integrate new or different ingredients for improved taste, smell, or texture
  • Design new packaging for improved temperature regulation or durability
  • Modify formulations to include more sustainable ingredients

Due to the dynamic nature of the food and beverage industry, many companies are prime candidates for tax breaks. Companies developing new or improved food or beverage products, manufacturing processes, and packaging can qualify for sizable federal and state R&D tax credits.

Food Manufacturer Case Study

ItemAverage Annual Amount
Gross Revenues$63,000,000
Total Payroll$8,600,000
Qualified Research Expenses (QREs)$2,300,000
Net Federal Credits$180,000
Net State Credits$210,000
Total Net Federal and State Credits$390,000

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Food and Beverage

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Examples of Qualified Activities