R&D Tax Credit Payroll Offset Calculator

Translate your Section 41 research credit into an immediate payroll tax reduction. Enter your qualified research expenses, the effective credit percentage, and the quarter's employer Social Security liability to see how much payroll tax you can eliminate, how much credit will carry forward, and whether the annual offset cap constrains the benefit.

Total Section 41 qualified research expenses for the tax year.
Combined federal credit percentage after regular or ASC computations.
Quarterly 6.2% employer OASDI liability available for offset.
Optional. Additional payroll tax still due from earlier quarters that the credit can absorb.
Optional. Defaults to the current $500,000 limit for qualified startups.

For planning purposes only. Confirm eligibility, limitations, and elections with your tax advisor before filing.

Examples

  • $6,200,000 QRE, 10% credit rate, $480,000 payroll tax, $60,000 carryover ⇒ Payroll tax offset this quarter: $500,000.00 • Credit remaining for future quarters: $120,000.00 • Payroll tax still owed after applying the credit: $40,000.00. Annual cap limits the offset to $500,000.00.
  • $320,000 QRE, 7% credit rate, $22,400 payroll tax, optional fields blank ⇒ Payroll tax offset this quarter: $22,400.00 • Credit remaining for future quarters: $0.00 • Payroll tax still owed after applying the credit: $0.00.

FAQ

Does this calculator assume the regular or ASC credit method?

It accepts whichever effective percentage you computed from Form 6765. You can input the regular or alternative simplified credit rate as long as it reflects the final federal amount available for payroll offset.

Can I include Medicare payroll taxes in the offset?

No. Section 41 payroll offsets only reduce the employer Social Security portion up to the annual statutory cap. Medicare and additional Medicare taxes remain due in full.

What happens if I exceed the annual payroll offset limit?

Any credit amount above the limit carries forward to future income tax years. You can use the remaining credit to offset income tax or future payroll taxes once a new offset election is available.

Additional Information

  • The payroll offset only applies to the employer's 6.2% Social Security portion of FICA taxes.
  • Startup companies can elect to apply the R&D credit against payroll taxes for up to five years.
  • Any unused federal credit typically carries forward twenty years for income tax purposes.

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