Your platform development, API engineering, scalability optimization, and cloud infrastructure work qualifies for substantial R&D tax credits. Average SaaS startup savings: $150K-$400K annually.
SaaS companies are in a unique position to benefit from R&D tax credits. Unlike traditional software companies, SaaS businesses continuously develop, iterate, and optimize their platforms to serve thousands of customers simultaneously.
The multi-tenant architecture, scalability challenges, security requirements, and performance optimization work inherent to SaaS products almost always involves significant technical uncertainty and experimentation - the hallmarks of qualifying R&D activities.
With engineering teams typically comprising 60-80% of early-stage expenses, R&D credits can provide critical cash flow, extending runway by 3-6 months or more.
Multi-Tenant Architecture
Building scalable infrastructure serving thousands of customers
API Development
Complex integrations, webhooks, and real-time data synchronization
Performance Optimization
Database queries, caching strategies, load balancing
Security & Compliance
SOC 2, GDPR, encryption, access controls
To qualify for R&D credits, your SaaS development must involve technical uncertainty and experimentation. Here's what typically qualifies for SaaS companies:
The Key Distinction:
The dividing line is technical uncertainty. If you're solving a problem where the solution isn't obvious and requires experimentation, it likely qualifies. If you're implementing something straightforward using standard practices, it probably doesn't.
We review your development roadmap, sprint planning, and technical documentation to identify activities involving technical uncertainty and experimentation.
We determine what percentage of each engineer's time was spent on qualifying R&D activities versus routine development and maintenance.
We calculate federal and state credits based on qualified research expenses (QREs), including salaries, contractor costs, and cloud infrastructure.
Federal Credits:
State Credits (California example):
Total Annual R&D Tax Benefit:
Federal + State credits combined
$547,400
Extends runway by ~3 months
We see SaaS companies make these costly mistakes. Avoid them to maximize your credits and stay audit-compliant.
Many SaaS companies don't differentiate between new feature development (often qualifies) and maintenance work (usually doesn't). Without project-level time tracking, you're leaving money on the table or overclaiming.
Solution:
Implement project codes in your time tracking system (Jira, Linear, etc.) that separate "R&D - New Features" from "Maintenance" and "Customer Support". Even rough estimates work.
SaaS companies often miss that development and testing infrastructure (AWS, GCP costs) can qualify as supplies used in R&D. This includes dev/staging environments, testing databases, and CI/CD infrastructure.
Solution:
Tag cloud resources by environment (production vs. dev/test). Development infrastructure costs used for qualifying R&D activities can be included in your QRE calculation.
Visual design and basic UI work don't qualify. However, building new UI technologies, performance optimization for rendering, or accessibility features with technical challenges often do qualify.
Solution:
Separate frontend work into categories: "Visual Design" (doesn't qualify) vs. "Frontend Architecture" (often qualifies). Virtual DOM optimization, state management, and complex React patterns typically qualify.
The IRS expects contemporary records showing technical uncertainty and experimentation. GitHub commits saying "fixed bug" or "updated feature" don't demonstrate qualifying activities. You need proof of the technical challenges you faced.
Solution:
Maintain technical design docs, architecture decision records (ADRs), and detailed commit messages explaining the technical uncertainty. Document failed approaches and why they didn't work.
Pre-revenue or low-revenue SaaS companies (<$5M in gross receipts) can use R&D credits against payroll taxes (FICA), up to $500K annually. Many companies miss this valuable benefit because they think they need taxable income.
Solution:
If you're a qualified small business (QSB), elect the payroll tax credit on Form 6765. This provides cash benefit even when you have zero tax liability. Critical for early-stage SaaS.
Trying to reconstruct R&D activities from memory 12+ months later leads to poor documentation and missed credits. Plus, you miss out on quarterly payroll tax credit benefits.
Solution:
Set up tracking systems at the beginning of the year. Review sprint/project data quarterly to identify qualifying activities while they're fresh. This makes year-end calculation easy and audit-proof.
A B2B SaaS analytics platform serving enterprise customers. 14-month-old company, $2.8M ARR, 10 engineers, raised $8M Series A. Building a complex data pipeline processing billions of events daily.
The company's previous accountant told them they "weren't doing research" and didn't qualify for R&D credits. They were burning $150K/month and needed to extend runway before their next fundraise.
Credits Claimed:
Business Impact:
— CTO & Co-Founder
Follow this checklist to maximize your R&D credits and maintain audit-ready documentation.
We only get paid when you get paid. Our R&D credit studies are offered on a contingency basis, so there's zero risk to you.
20-25% of credits claimed (contingency fee)
$0 upfront cost
$0 risk - you only pay if we find credits
For a company claiming $300K in credits, our fee would be $60-75K. Your net benefit: $225-240K in your pocket.
ROI Guarantee: Our R&D credit studies typically deliver 3-5x return on our fee. If we don't find meaningful credits, you owe us nothing.
We also offer fixed-fee arrangements for companies with predictable R&D patterns or those preferring not to use contingency pricing.
Get a free assessment to see how much your SaaS development qualifies for. Most companies claim $150K-$400K annually.
Zero upfront cost • Contingency fee • No risk to you