Custom structural, MEP, and constructability engineering frequently require resolving design uncertainty for unique site, load, or code conditions — qualified when the firm bears the risk and retains rights.
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 |
|---|---|---|
| Custom structural engineering | Novel structural system or seismic design | Will the design meet load and code under site constraints? |
| MEP systems design | Complex HVAC, electrical, or plumbing system | How to optimize MEP for performance and code compliance? |
| BIM & digital modeling | Clash detection, parametric coordination | How to model and coordinate complex systems digitally? |
| Prefabrication & modular | Modular or prefabricated assemblies | Will prefab methods meet tolerance and structural needs? |
| Energy & sustainability design | Net-zero or passive-system design | Will the design meet energy-performance targets? |
| New materials & methods | Mass timber, novel concrete mix | Will the material or method perform structurally? |
| Geotechnical & site engineering | Foundation design in difficult soils | Which approach resolves the geotechnical uncertainty? |
| Construction process / sequencing | New construction method or sequence | Which method is feasible, safe, and efficient? |
For an unusual site, engineers model and compare foundation or structural alternatives to resolve uncertain soil and load behavior, then test the selected approach. The work may qualify if it involves a documented process of experimentation and the firm bears the research risk and retains substantial rights.
Preparing permit drawings from established plans, routine code checks, or ordinary field coordination generally does not involve experimentation. Client-paid work may also be excluded as funded research when the client bears the financial risk and retains the rights; the contract terms and actual work matter.
Find your own job titles below. Each row shows the wage category a role usually falls under and the kinds of work that typically do and do not count. Titles alone never make wages eligible; the activity must meet the four-part test.
7 of 7 roles shown
| Role | What they do | Wage category | Typically qualifies | Typically does not |
|---|---|---|---|---|
| Tests designs against loads, constraints and performance requirements. | Direct research | Comparing uncertain structural alternatives, Experimental connection designs +1 more | Routine code checks, Applying established details +1 more | |
Typically qualifies
Typically does not
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| Develops site and infrastructure solutions where the approach is uncertain. | Direct research | Uncertain drainage system alternatives, Experimental foundation methods +1 more | Routine surveying, Standard site plans +1 more | |
Typically qualifies
Typically does not
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| Develops building systems that must work under unusual constraints. | Direct research | Uncertain thermal-system design, Novel integration alternatives +1 more | Standard equipment selection, Routine inspections +1 more | |
Typically qualifies
Typically does not
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| Evaluates technical building designs rather than appearance alone. | Direct research | Experimental envelope assemblies, Technical performance design alternatives +1 more | Aesthetic design alone, Client presentations +1 more | |
Typically qualifies
Typically does not
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| Builds models and tools used to test engineering alternatives. | Direct support | Model preparation for qualifying experiments, Research-specific simulation support +1 more | Routine clash detection, Standard model updates +1 more | |
Typically qualifies
Typically does not
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| Develops and tests uncertain construction methods. | Direct research | Experimental assembly methods, Uncertain temporary support designs +1 more | Project scheduling, Routine site supervision +1 more | |
Typically qualifies
Typically does not
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| Directly supervises the engineers testing design alternatives. | Direct supervision | First-line technical direction, Review of qualifying experiments +1 more | Client billing, General project management +1 more | |
Typically qualifies
Typically does not
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Wage categories follow IRC Section 41. Only the portion of time spent on qualified research counts, and the percentage must be documented.
Funded-research risk is high in AEC. Work fully paid for by a client who bears the risk, with no retained rights, is excluded. Confirm contract terms 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.
Take these into a 15-minute conversation with your team.
The last question matters most. Customer-funded work and work performed outside the US are generally excluded. Funded work is excluded to the extent your business does not bear the financial risk or does not retain substantial rights in the results.
No. Customization by itself does not establish qualified research. Document technical uncertainty, the alternatives evaluated and the experimentation used to resolve it.
Contract terms and actual risk allocation matter. Work may be excluded as funded research when you do not bear financial risk or retain substantial rights in the research.
They may support qualifying research when used to test uncertain technical alternatives. Routine modeling, drafting and clash detection are not automatically research.
Routine permitting and compliance administration generally are not qualified research. Separate those tasks from technical experiments undertaken to solve design uncertainties.
A portion of eligible U.S. contract research expenses may count when applicable requirements are satisfied. Review agreements, retained rights, financial risk and the actual research performed.
Keep design alternatives, calculation revisions, simulation outputs, test records and supported time allocations. Retain contracts so the research funding and rights analysis can be reviewed.
Most companies underestimate what they can claim. Our study covers every qualifying role, every component, and every year still open for amendment.
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