Industry Spotlight

Expanding the Metallurgical Industry with R&E Tax Credits

By April 12, 2021 April 19th, 2021
Image of steel foundry, metallurgical industry makes substantial investments in time and resources to develop and improve designs and processes, qualifying for R&E Tax Credits

Metallurgy is one of the oldest known industries, dating back to 1200 BC and the start of the iron age.  Despite this, new demands on process conditions, cycle time, material grades, and alloys have pushed the industry to innovate and embrace new technology to move into our newest era – Industry 4.0.

Many companies in the metallurgical industry, including foundries, die-casters, and heat-treatment facilities, may be making substantial investments in time and resources to develop and improve designs and processes. Federal and state research and experimentation tax credits reward companies for those efforts.

Research Tax Credit

The Research & Experimentation tax credit, also referred to as “R&E” or “research” tax credit, is designed to incentivize companies to invest in people and technology that can lead to growth in revenues and profitability, as well as to promote job retention and expansion.  These credits focus on qualified wages, supply costs, and contract research. 

Heat treatment involves heating or chilling, normally to extreme temperatures, to achieve the desired result, such as hardening or softening of a material. Heat treatment techniques include annealing, case hardening, precipitation strengthening, tempering, carburizing, normalizing, and quenching. 

Examples of Qualifying Research Activities

Whereas standardized and routine processes do not qualify for the R&E tax credit, heat treaters who undertake the following types of activities may be able to benefit from the R&E tax credit:

  • Cycle time improvements (including thermal cycling)
  • Temperature control and consistency for soaking time
  • Energy or utility saving initiatives
  • Automation and robotics development and integration
  • Fixtures and tooling design and development (including prototyping)
  • Cryogenic treatment development:
    • Investigating the interplay between various metallurgical principles responsible for the increase in wear resistance, tensile strength, toughness, and stability
    • Developing cryogenic treatment for non-standard applications, such as cutting tools 
  • Process development for new grades/alloy combinations
  • Testing procedures (non-destructive, automated sample prep time, alternative methodology development)
  • Design of racking systems/tables to maximize accessibility to the surface area
  • Modeling/Simulations of airflow, heat transfer, soaking time, materials, geometrical or symmetry considerations
  • Techniques to control distortion and warping of parts
  • Development of processes to achieve desired recrystallization grain size through annealing technique development

The DST Advantage

DST’s technical team is comprised of engineers with specific experience in steel-making and the metallurgical industry.  Coupled with our legal and tax team, we can construct a solid claim based on engineering facts supported by legislation and regulations. Our team will explain the program in detail and explain how we can take you through the process of ensuring you maximize your legitimate Research Tax Credit claim. 

Contact DST Advisory Group at 877-214-8920  for a no-charge assessment to confirm if your company can qualify for these credits.

Download our full Industry Spotlight on Metallurgy and R&E Tax credits