R&D Tax Credit Calculator for Startups

How the estimator works

Qualified research expenses (QREs) are the sum of wages paid for qualified services, supplies used in research, amounts paid for the right to use computers in research, and 65% of what you pay contractors for qualified research (26 U.S.C. 41(b)). The estimator then applies the alternative simplified credit (ASC) in 41(c)(4): 14% of the current year's QREs above half of the average for the three prior years, or 6% of the current year's QREs if any one of those years had none. These are the same steps as lines 20 to 24 of Form 6765.

Next comes the Section 280C(c) choice. Without an election, your Section 174A deduction for domestic research is reduced by the credit. With the election, the credit is cut instead, to the credit minus the credit times the top corporate rate of 21%, which is the 79% on Form 6765 line 26. Finally the tool runs the qualified small business test from 41(h) and the Section G exceptions from the Form 6765 instructions (Rev. December 2025).

Worked example: the default inputs

An illustrative SaaS company claims the credit for 2026. Its engineers are in the US. It had its first revenue in 2023, books $1,800,000 of gross receipts in 2026, and made one payroll election before.

The three prior years add up to $1,748,000, an average of $582,667, so the base is half of that, $291,333. QREs above the base are $898,667, and 14% of that is a credit of $125,813. With the Section 280C election it would be $99,393; without it, the 2026 Section 174A deduction is $125,813 smaller. Assume it has a tax loss either way: then a smaller deduction only shrinks its loss carryforward, so it keeps the full credit.

It passes the qualified small business test: receipts are under $5 million and its first receipts (2023) fall inside the five years 2022 to 2026. It elects to apply all $125,813 against payroll tax. If it files its 2026 Form 1120 by March 31, 2027, it starts using the credit in Q2 (Apr-Jun) 2027. At $30,000 of employer Social Security and Medicare tax per quarter, that takes 5 quarters ($30,000, $30,000, $30,000, $30,000, $5,813). If it waits for the October extension date, the first quarter moves to Q1 (Jan-Mar) 2028, six months later. Because it takes the payroll election, Section G is not required, and its QREs of $1,190,000 would also qualify for the small-claim exception.

What the estimator does not do

• It does not decide which activities are qualified research. Each business component has to pass the four-part test in 41(d), and research done outside the US is excluded.
• It uses the ASC only. The regular credit (Form 6765 Section A, 20% over a fixed-base amount) can be larger for some companies; the instructions suggest figuring both where you are eligible.
• It does not model controlled groups, short tax years, basic research or energy consortium payments, the general business credit limit, AMT or state research credits.
• The payroll schedule assumes your employer Social Security and Medicare tax stays flat each quarter.

For the filing side, including what Section G asks for by business component, see our Form 6765 guide for SaaS companies. For how the credit interacts with expensing, see Section 174A: domestic R&D is deductible again. The Excel version has the same defaults and formulas.