Unlocking hidden value: R&D tax credits for foundries

Foundries are innovation powerhouses, constantly pushing the boundaries of metallurgy, manufacturing processes, and product development. The Research and Development (R&D) tax credit represents a powerful financial tool that can transform your day to day activities into substantial tax savings and improved cash flow.

Section 174 Changes: A Critical Strategic Planning Opportunity

The recent changes to Section 174 have created a significant challenge for businesses claiming the R&D tax credit. These changes, which require taxpayers to capitalize and amortize R&D expenses rather than deducting them immediately, have led to increased tax burdens for many companies. However, the incoming Congress and Administration have aligned on the need to rectify these provisions, offering a timely opportunity for businesses to act before this issue is resolved.

With the party that proposed these fixes now controlling both Houses of Congress and the Presidency, the largest barriers to amending Section 174 have been removed. This alignment has set the stage for swift action. Our Strategic Advisory Board, comprised of seasoned policymakers and tax experts, is intimately involved in the ongoing discussions surrounding Section 174. They are confident that these issues will be addressed, and the tax relief businesses need will be restored.

Qualifying Activities for Foundries

Many foundries day to day activities directly align with R&D tax credit qualifications. Process improvement initiatives are a prime example, wherein foundries routinely develop and test new techniques to enhance metal casting precision, reduce defects, and improve overall manufacturing efficiency. Activities such as designing improved casting molds, experimenting with new alloy compositions, or developing advanced cooling techniques can all qualify for R&D credits.

Critical Timing Considerations

The landscape for R&D tax credits is evolving rapidly. Recent changes to Section 174 and ongoing legislative discussions make immediate action crucial. The statute of limitations for claiming 2021 credits is closing, and potential legislative changes could impact future credit calculations. Proactive foundries shouldn secure credits before potential regulatory shifts.

The Bottom Line

R&D tax credits are not just a tax strategy—they're a recognition of your foundry's commitment to innovation. By leveraging these credits, you can reduce tax liabilities, reinvest savings into further research and development, and gain a competitive edge in the manufacturing landscape.

Don't let this opportunity slip away. The window for claiming recent R&D credits is narrowing, and the potential savings are significant. Reach out to a qualified tax consultant specializing in manufacturing R&D credits to explore your foundry's specific opportunities.

alliant, the leading consultancy and a member of the Non-Ferrous Founders' Society, is committed to helping the drivers of the American economy. Through our expertise in credits & incentives, talent solutions, and emerging technologies like Generative AI, we arm these companies with the tools they need to compete on a global scale. Learn more at www.alliantgroup.com or hear Rick Lazio of alliant present at the 2025 NFFS Industry Executive Conference on February 22, 2025, in New Orleans.