Route optimization & warehouse automation
Estimate your credit →Optimization algorithms, automation systems, and forecasting models require experimentation to perform under real-world variability and scale.
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 |
|---|---|---|
| Route & network optimization | Routing algorithm or network model | Which algorithm minimizes cost and time at scale? |
| Warehouse automation | AS/RS, robotics, pick-path optimization | How to integrate automation reliably? |
| Fleet & telematics systems | Telematics, predictive maintenance | Which models predict failures accurately? |
| Supply-chain software | Demand forecasting, inventory optimization | Which forecasting approach actually performs? |
| Last-mile & delivery tech | Delivery optimization and tracking | How to optimize under real-world constraints? |
| Sortation & material handling | Automated sortation systems | Which design hits throughput and accuracy targets? |
| Cold-chain & specialized transport | Temperature-controlled logistics | How to maintain conditions reliably end to end? |
| Autonomous & ADAS integration | Autonomous yard trucks or assist systems | Can the system operate safely and reliably? |
A team builds and tests competing routing approaches for a mixed fleet with tight delivery windows, using simulations and a pilot to resolve uncertainty under real traffic and capacity constraints. Development may qualify when the technical alternatives are evaluated systematically and the company bears the risk and retains substantial rights.
Daily dispatch decisions, tracking shipments, or configuring an off-the-shelf transportation system to standard settings are generally routine operations, not experimentation. For customer-funded software or automation, work may be excluded as funded research if the customer bears the risk and retains rights; review the contract and project facts.
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 |
|---|---|---|---|---|
| Develops routing methods that work under real-world technical constraints. | Direct research | Experimental routing algorithms, Uncertain solver performance improvements +1 more | Routine dispatching, Rate negotiation +1 more | |
Typically qualifies
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| Builds the software that coordinates vehicles and shipments. | Direct research | Uncertain distributed tracking architecture, Fault-tolerant synchronization experiments +1 more | Routine software configuration, Customer account setup +1 more | |
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Typically does not
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| Develops how automated equipment handles and moves goods. | Direct research | Experimental control logic, Uncertain sensing and handling integration +1 more | Standard equipment installation, Routine repairs +1 more | |
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Typically does not
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| Makes vehicle and shipment data usable despite unreliable inputs. | Direct research | Experimental telemetry processing, Uncertain event-recovery methods +1 more | Routine tracking reports, Dashboard maintenance +1 more | |
Typically qualifies
Typically does not
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| Runs trials of developing vehicle or warehouse systems. | Direct support | Instrumenting qualifying field trials, Collecting experimental measurements +1 more | Routine vehicle inspections, Regular deliveries +1 more | |
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| Creates tests that expose technical limits in developing logistics systems. | Direct support | Qualifying simulation test support, Experiment-specific load testing +1 more | Routine regression checks, Production monitoring +1 more | |
Typically qualifies
Typically does not
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| Directly guides engineers through experimental development. | Direct supervision | First-line supervision of technical trials, Reviewing uncertain system alternatives +1 more | Fleet scheduling, General warehouse 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.
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.
Potentially, if development tests technical alternatives to resolve uncertainty about capability, method or design. Routine route planning and cost analysis alone are not qualified research.
Purchasing or installing a proven system is not automatically research. Experimental development needed to resolve uncertain technical performance may require a separate review.
Software used for internal general and administrative functions can face additional requirements. The intended use and specific functionality determine whether internal-use software rules apply. Read the software rules
They can support qualifying research when they test technical alternatives. Keep trial plans and results and separate experimental activities from ordinary deliveries or warehouse operations.
Research performed outside the United States generally is excluded from the federal credit. Separate time and costs by where the research was actually performed.
Retain algorithm versions, architecture decisions, simulation and field-test logs, and time-allocation support. Tie the evidence to specific technical uncertainties rather than operational savings alone.
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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