Why CFOs Should Factor R&D Tax Credits Into Fiscal Year Capital Planning
As we approach budgeting season for FY2026 for companies with a December fiscal year-end, CFOs and finance leaders are gearing up to make critical capital planning decisions. While growth targets, headcount, and cost controls are often front and center, one key lever is often underutilized: R&D tax credits.
These credits—both federal and provincial/state-level—can dramatically amplify the power of your R&D budget if accounted for early in the planning cycle.
What’s At Stake: Up to 60%+ Reinvestment Potential
R&D tax credits can return 10% to 60%+ of eligible expenditures back to your organization, depending on jurisdiction, structure, and claim strategy. But these returns aren’t automatic—you must plan to earn them.
When R&D credits are treated as an afterthought at year-end, companies often leave money on the table. Instead, integrating R&D tax planning into your 2026 budgeting now allows you to:
Stretch each dollar of your innovation spend further
Identify eligible projects and personnel early
Optimize hiring and resourcing decisions for maximum ROI
Key Planning Factors for CFOs
1. Geography Matters: Choose Talent Locations Strategically
R&D credit rates vary widely across U.S. states and Canadian provinces. Some jurisdictions offer stackable, refundable, or enhanced credits for small businesses or specific industries. A software engineer in Quebec or a mechanical designer in Virginia may generate significantly more credit value than the same role elsewhere.
Action: Map your hiring roadmap against credit-rich jurisdictions.
2. Employees Beat Contractors
Tax authorities heavily favor internal employee salaries over subcontractor costs when calculating credit amounts. In many cases, third-party contractor expenses are either ineligible or subject to reduced rates.
Action: Where feasible, prioritize internal hiring for core R&D functions to maximize your claimable base.
3. Know Your Eligible Activities and Plan Around Them
The R&D tax definition is broader than many expect—it includes experimental development, system architecture, algorithm design, prototyping, and more. By identifying qualifying activities during budget season, you can align project scopes and staffing to maximize credit eligibility.
Action: Pre-qualify FY2026 projects based on eligibility criteria and earmark documentation requirements.
R&D Credits Are a Strategic Finance Tool—Not a Tax Afterthought
Capital planning isn’t just about controlling burn or allocating runway. It’s about leveraging every available advantage to fund growth and innovation. R&D credits can represent hundreds of thousands—or millions—of dollars in potential cash or tax relief, but only if you’re planning with them in mind now.
Work With Experts Who Know the Landscape
At Elevyn, we specialize in R&D finance strategy. We go beyond just preparing claims—we help your finance team understand the moving pieces so you can:
Make smarter hiring and location decisions
Align engineering goals with tax incentives
Forecast and reinvest your R&D returns with confidence
Let’s make FY2026 your most capital-efficient year yet.
Reach out now to plan smarter, claim bigger, and innovate with less friction. Let’s get started.
