Airframe, propulsion, avionics, and systems development demand resolving severe technical uncertainty under stringent safety, weight, and environmental constraints.
The credit is calculated on qualified research expenses (QREs) — primarily wages for engineers and technical staff who spend time on qualifying activities, plus supplies, cloud/compute, and 65% of qualified contract research.
The table below lists the business components that most often qualify, a common example, and the technical uncertainty that makes each one defensible.
| Business component | Example | Technical uncertainty |
|---|---|---|
| Airframe & structures | New airframe or composite structure | Will it meet load, weight, and fatigue requirements? |
| Propulsion systems | Engine, thruster, or propulsion module | Will it meet thrust, efficiency, and thermal targets? |
| Avionics & flight systems | Flight control or navigation system | Will the system meet safety and reliability standards? |
| Materials & coatings | High-temperature alloy, composite, coating | Will the material survive the operating environment? |
| Guidance & control software | GNC algorithms and flight software | Which algorithm meets accuracy and stability needs? |
| Systems integration & test | Integration and environmental testing | Can subsystems integrate and perform reliably? |
| UAS & autonomous systems | Drone platform or autonomy stack | Can it operate safely and reliably? |
| Manufacturing & process | New aerospace manufacturing process | Will the process meet spec and certification? |
Wages for time spent on qualified research may count toward your credit. Percentages depend on facts and must be documented.
Funded-research risk is high in defense contracting. Cost-plus or fully funded contracts where the customer bears the risk and holds the rights are typically excluded. Confirm contract structure before claiming.
Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.
The IRS requires qualifying research to satisfy four tests. Here's how they typically map for this industry:
The activity aims at improving a product, process, software, or technique used in the business — not just a business outcome.
The work relies on principles of engineering, computer science, biology, chemistry, or another hard science to resolve uncertainty.
There was genuine uncertainty at the outset about whether — or how — the component could be built or improved.
The team evaluated alternatives: A/B tests, prototypes, benchmarks, simulations, or iterative design-build-test cycles.
Most companies underestimate what they can claim. Our study covers every qualifying role, every component, and every year still open for amendment.
Get your free estimate →