Platforms, APIs, algorithms & ML/AI models
Estimate your credit →Building, improving, and scaling software involves continuous technical uncertainty resolved through iterative development and testing — the core of qualified research for modern software companies.
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 |
|---|---|---|
| New platform development | Multi-tenant SaaS, marketplace, or vertical platform | Which architecture scales to the target load and reliability? |
| Proprietary AI / ML features | Recommendation engine, LLM agent, fraud-detection model | Which model architecture and training approach actually perform? |
| Significant product enhancement | Reporting-engine redesign, new billing or onboarding module | Can the new design hold performance at production scale? |
| Scalability & performance | Monolith-to-microservices, query and latency optimization | How to cut latency while preserving reliability? |
| Complex integrations & APIs | ERP, payroll, banking, or EHR integrations | How to reconcile disparate data models and handle failures? |
| Cybersecurity & data protection | Encryption, identity, role-based access control | Which security architecture withstands the threat model? |
| Real-time data & pipelines | Event streaming, ETL and analytics at volume | How to process at low latency without data loss? |
| Internal automation & AI tools | Internal workflow engine, RAG assistant | Which automation logic performs reliably? (internal-use bar applies) |
Wages for time spent on qualified research may count toward your credit. Percentages depend on facts and 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.
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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