Examples of research and development activity can be found across many industries. This page provides illustrative examples of the kinds of work commonly described as R&D, organized by industry, to help readers recognize R&D activity in a business context. It is important to understand that these examples illustrate R&D activity in the general sense — they do not automatically establish that any particular activity qualifies for the federal R&D tax credit. For the distinction between general R&D and qualified research, see our page on what research and development is.
How to Read These Examples
The examples below describe the kind of work that is commonly characterized as R&D — work involving technical uncertainty and experimentation, directed at developing or improving a product, process, or technique. They are illustrations, not conclusions. Whether any particular activity constitutes qualified research for the federal tax credit depends on whether it satisfies the four-part test under Section 41 and whether any exclusions apply. For more, see our page on qualified research.
Manufacturing
In manufacturing, R&D examples include:
- Experimenting with a new material or alloy to meet a specific performance or durability target where the appropriate formulation is uncertain.
- Testing alternative production processes to improve yield, reduce defects, or achieve a specific quality target where the method is not established.
- Developing a new manufacturing technique for a product that cannot be made with existing methods.
- Evaluating alternative tooling or fixture designs to resolve a technical question about capability or reliability.
In each case, the work involves a technical question that is not resolved at the outset and an evaluative process to address it.
Software
In software, R&D examples include:
- Evaluating alternative software architectures to resolve a question about whether a system can achieve a target capability or scale.
- Developing or evaluating algorithms where the appropriate method or design is uncertain.
- Resolving integration uncertainty where combining systems raises a technical question not established at the outset.
- Engineering for reliability or security where the appropriate design is uncertain and is evaluated through testing.
Software development raises specific considerations, including the internal-use-software rules, which are addressed separately. For more, see our page on software development and the R&D tax credit.
Food and Product Formulation
In food and product formulation, R&D examples include:
- Developing a new food formulation to achieve a specific texture, shelf-life, or nutritional profile where the capability or method is uncertain.
- Experimenting with alternative ingredients to meet a performance or cost target where the appropriate formulation is not established.
- Testing alternative processing conditions to achieve a desired product characteristic where the method is uncertain.
- Developing a new packaging material or design to meet a performance target where the appropriate design is uncertain.
Engineering
In engineering, R&D examples include:
- Designing and testing a new mechanical or structural component to meet a performance or reliability target where the appropriate design is uncertain.
- Evaluating alternative configurations to resolve a question about capability or method.
- Developing a new testing or measurement method to evaluate a technical question.
- Modeling or simulating alternative designs to determine an appropriate configuration where the capability or method is uncertain.
Construction and Process Development
In construction and process development, R&D examples include:
- Developing a new construction method or technique to achieve a specific performance or efficiency target where the method is uncertain.
- Testing alternative materials or configurations for a construction application where the appropriate design is not established.
- Developing a new process for producing or installing a product where the capability or method is uncertain.
- Evaluating alternative approaches to resolve a technical question about a construction or production process.
Electronics
In electronics, R&D examples include:
- Designing and testing a new circuit or component to meet a performance, power, or size target where the appropriate design is uncertain.
- Evaluating alternative configurations to resolve a question about capability or reliability.
- Developing a new sensor or measurement system to achieve a specific performance target where the method is uncertain.
- Testing alternative materials or manufacturing approaches for an electronic component where the appropriate design is not established.
Materials
In materials, R&D examples include:
- Developing a new material or composite to achieve a specific performance property where the capability or method is uncertain.
- Experimenting with alternative formulations to meet a target for strength, weight, durability, or other properties.
- Testing alternative processing conditions to achieve a desired material characteristic where the method is uncertain.
- Evaluating alternative approaches to producing or applying a material where the appropriate design is not established.
Industrial Processes
In industrial processes, R&D examples include:
- Developing a new process for producing or refining a material where the capability or method is uncertain.
- Testing alternative process configurations to improve efficiency, yield, or quality where the method is not established.
- Evaluating alternative approaches to waste reduction, energy efficiency, or emissions control where the appropriate design is uncertain.
- Developing a new method for measuring or controlling a process parameter where the capability is uncertain.
What These Examples Do Not Establish
It cannot be emphasized enough: these examples illustrate R&D activity in the general business sense. They do not automatically establish that any particular activity constitutes qualified research for the federal R&D tax credit. Whether an activity qualifies depends on whether it satisfies the four-part test — permitted purpose, technological in nature, elimination of uncertainty, and process of experimentation — applied to a business component, and whether any exclusions apply (such as research after commercial production, adaptation, duplication, certain internal-use software, or funded research). For more, see our pages on qualified research and the four-part test.
Examples vs. Qualification
A common misunderstanding is that being in an industry "known for R&D" automatically means a business's activities qualify for the tax credit. They do not. Industry is not a proxy for qualification. A business in an industry commonly associated with research may conduct activities that do not qualify, and a business in an industry not commonly associated with research may conduct activities that do. The question is what the business actually did, not what sector it is in. For more, see our page on who can claim the R&D tax credit.
Key Takeaway
Examples of R&D activity can be found across manufacturing, software, food and product formulation, engineering, construction processes, electronics, materials, and industrial processes. These examples illustrate work involving technical uncertainty and experimentation, directed at developing or improving a product, process, or technique. They do not automatically establish federal tax-credit eligibility — qualification depends on whether the specific activity satisfies the four-part test and whether any exclusions apply. For the distinction between general R&D and qualified research, see our page on what research and development is.