R&D Tax Credit for Food and Beverage Companies

Food and beverage companies develop new products, reformulate existing ones, and scale production processes — activities that often involve genuine experimentation and technological uncertainty. These may qualify for the R&D tax credit.

What qualifies

Food and beverage R&D qualifies when it meets the four-part test. The credit covers activities where your team faces uncertainty about formulation, process, shelf stability, or production scale-up and resolves that uncertainty through systematic experimentation.

Common qualifying activities

Product formulation

• Developing new food or beverage products where flavor, texture, stability, or nutritional profile outcomes are uncertain
• Reformulating products to eliminate allergens, reduce sodium or sugar, or meet new dietary standards while maintaining taste and quality
• Experimenting with alternative ingredients (plant-based proteins, natural preservatives, alternative sweeteners) where product characteristics are uncertain
• Developing products for specific functional claims where achieving target levels requires testing

Process development

• Scaling production from test kitchen to full manufacturing where equipment, temperatures, pressures, or timing produce different results
• Developing cooking, mixing, or fermentation processes where parameters must be determined experimentally
• Adapting production lines to handle new product formats (different viscosities, particle sizes, or packaging requirements)
• Engineering continuous-flow processes to replace batch production while maintaining consistency

Shelf life and stability

• Testing preservation methods, packaging configurations, or modified atmosphere approaches where shelf-life outcomes are uncertain
• Developing processes to extend shelf life without artificial preservatives
• Evaluating ingredient interactions that affect product stability over time
• Accelerated aging studies to predict product behavior under distribution conditions

Quality and safety

• Developing detection methods for contaminants, allergens, or spoilage indicators
• Engineering pasteurization, sterilization, or high-pressure processing parameters for new products
• Developing HACCP-related processes for novel food products where hazard points are not established

Packaging

• Developing packaging solutions that interact with food products in uncertain ways (moisture barriers, oxygen scavenging, modified atmosphere)
• Engineering packaging for new product formats where structural or functional performance requires testing

What does not qualify

• Routine quality testing using established methods
• Producing existing products with no formulation or process changes
• Taste panels and market research (social sciences exclusion)
• Cosmetic changes to packaging with no technical challenge
• Routine regulatory compliance where the testing protocol is prescribed

Qualifying expenses

Food and beverage companies often have QREs across all three categories:

• Wages — food scientists, process engineers, quality engineers, and production staff involved in R&D
• Supplies — ingredients, raw materials, and test batches consumed during development (not production quantities)
• Contract research — outside laboratory testing, ingredient analysis, or process engineering

Related pages

• What Qualifies — the four-part test in detail
• Qualified Research Expenses — what expenses count
• Documentation Requirements — what records to keep
• Estimate your credit — free calculator