Decking Companies
The R&D Tax Credit Explained
The Research and Development (R&D) Tax Credit is a federal (and in many cases, state) tax incentive designed to reward businesses that develop or improve products, processes, or software. For decking companies, this includes the innovation of materials, finishes, designs, construction systems, and installation methods.
Even if your company doesn’t have a formal R&D department, you may still qualify if you’re solving technical challenges or developing new approaches to construction, safety, or materials.
QUALIFYING ACTIVITIES
- Developing new composite materials (eco-friendly, moisture-resistant, etc.)
- Improving durability, fire resistance, or UV stability of deck boards
- Designing new joist systems, fasteners, or under-deck drainage solutions
- Engineering modular or pre-fab systems for easier installation
- Prototyping and testing non-slip surfaces or coatings
- Experimenting with tooling, molding, or extrusion methods
- Enhancing installation processes for time or cost efficiency
- Creating load-bearing innovations or code-compliant improvements
- Integrating lighting systems, solar elements, or smart tech
WHAT cAN BE CLAIMED
You can claim expenses associated with the qualified research activities, including:
- Wages for employees involved in R&D (designers, engineers, developers)
- Materials and supplies used in prototyping or testing
- Contractor expenses (engineers, consultants, prototype fabricators)
- Computer software or modeling tools used in design and analysis
- Field testing and trials for new products or methods
WHAT DOESN'T QUALIFY
Certain activities are excluded, even if they relate to product development:
- Cosmetic design updates with no technical component (e.g., color only)
- Routine or reverse engineering of competitor products
- Installation or standard construction work
- Marketing, sales, or advertising efforts
- Projects conducted outside the U.S.
- Duplication of existing decking systems
HOW THE CREDIt WORKS
The R&D tax credit is available at both federal and state levels.
There are two ways decking companies typically apply the credit:
- Startup Companies (under $5M in revenue and <5 years old): can apply the credit against payroll taxes (up to $500,000/year).
- Established Companies: use the credit to reduce federal income tax liability.
The credit can also be carried forward up to 20 years if not fully used in the current year.
Average R&D Tax Credit for Decking Companies
Company Type | Typical Annual Credit |
Small Custom Decking Firms | $15,000 – $50,000 |
Mid-Sized Manufacturers or Installers | $50,000 – $200,000 |
Large Manufacturers or Multi-State Builders | $200,000 – $1,000,000+ |
Credits vary based on the amount of experimentation, technical personnel involved, and number of projects per year.
For Small to Mid-Sized Decking Companies
Smaller companies often qualify by:
- Prototyping new material blends or coatings
- Developing code-compliant or ADA-friendly solutions
- Innovating tools, jigs, or installation systems
- Creating energy-efficient or sustainable materials
Even if you outsource parts of your design or testing, the related costs may still qualify.
For Larger Manufacturers or Multi-Location Operations
Larger decking firms typically engage in:
- Developing proprietary materials (e.g., capped composites, bamboo-PVC hybrids)
- Investing in automation or advanced extrusion technology
- Expanding into smart or solar-integrated decking products
- Running multiple test sites or engineering teams
- Optimizing production workflows to reduce scrap or increase lifespan
These types of activities can qualify for hundreds of thousands in annual tax credits.
