The Hidden Power of R&D Credits: What Leaders Need to Know Now

Guest Post (Reprint) - Originally published on Substack; republished here with permission. The Hidden Power of R&D Credits: What Leaders Need to Know Now. Disclosure: Berkley Life Sciences is a sponsor of The Vanguard Network. Views are the author's and do not necessarily reflect the views of Berkley Life Sciences or its affiliates

Most leaders tune out when they hear “tax credit.” That may be a mistake. R&D credits have quietly expanded and can unlock real strategic value for life sciences companies. I’ve spent enough time in boardrooms and leadership meetings to know that when someone says “tax credit,” most ears glaze over. It’s the kind of topic that lands squarely in the important but not urgent bucket. And yet, the conversations I’ve been having lately with experts in the life sciences are making me rethink that instinct.

R&D tax credits might be one of the most undervalued tools in a leader’s strategic toolkit. Not because leaders don’t know they exist, but because many don’t fully understand how broad, nuanced, and powerful they’ve become, especially following recent changes to the U.S. tax code.

I recently listened to Dr. Jordan Jahrling, a neuroscientist and practice lead specializing in life sciences R&D tax credits, in conversation with Neil Shah, a senior advisor who has spent years helping companies navigate this terrain. Between them, they’ve helped organizations unlock hundreds of millions of dollars in credits. What stood out wasn’t just the potential savings. It was how easily leaders can miss the opportunity altogether.

Not Just for the Lab Coats

Most companies in research-heavy sectors like pharma and biotech assume they probably qualify for R&D credits. But as Dr. Jahrling explained, many apply an overly narrow definition of what actually counts as research and development.

If you think eligibility stops with bench scientists, think again.

Under current law, qualifying R&D activities extend well beyond the lab. A quality assurance team developing new testing protocols may qualify. Software engineers building internal platforms for clinical trial management may qualify. Even packaging redesign, process improvements, and technology transfer projects can fall within scope.

Dr. Jahrling outlined three tiers of qualifying services: direct conduct, direct supervision, and direct support. That means a regulatory expert working on FDA pre-submission evaluations may be just as eligible as the scientist analyzing compounds. Leaders who rely on broad, cross-functional teams to drive innovation should take note.

Risk, Reward, and Reinvention

Neil Shah was quick to point out that R&D tax credits are about more than savings. They are designed to incentivize innovation in the United States and help companies remain competitive globally.

That mission depends on how success is defined. In traditional accounting, a failed project is a sunk cost. In the world of R&D credits, it may still generate value. Projects do not need to reach commercialization to qualify. Failure can still count.

That’s a surprisingly forward-looking stance for government-backed policy. It also offers leaders a useful lens. Smart risk-taking can be encouraged when learning efforts are recognized, even if outcomes fall short.

Documentation or Bust

Of course, there’s a catch. Documentation.

The IRS has significantly increased its documentation requirements to reduce fraud and improve clarity. Where companies once listed expenses at a high level, they now have to show, line by line, which individuals performed qualifying activities and how those efforts connect to R&D.

As Shah noted, this is where many organizations fall short. The work is happening, but it’s not being documented in a way the IRS can easily assess.

For leaders, this isn’t just a compliance issue. It’s a cultural one. Strong R&D credit strategies require collaboration across finance, legal, tax, operations, and technical teams. That takes time and discipline, but it also unlocks value that would otherwise stay buried.

A Call for Strategic Diligence

The takeaway is simple. If you lead a company doing technical or scientific work in the United States, you likely qualify for some level of R&D tax credit. Doing it well just requires a fresh look and a more intentional leadership focus.

For pre-revenue companies, the opportunity can be even greater. Credits can be applied against payroll tax or carried forward as assets for years.

Leadership today isn’t only about hitting performance targets. It’s about widening the gap between you and your competitors by pulling every available lever. Sometimes that lever is hidden deep inside a long piece of legislation.

If you’re unsure whether your company is leaving money on the table, ask the question. Bring in partners who speak both science and tax. Make documentation part of your innovation process. You may be surprised by what’s hiding in plain sight.

I’m grateful to alliantgroup for their partnership and sponsorship of this discussion. Their deep expertise in R&D tax strategy for life sciences companies continues to help leaders better understand how innovation, compliance, and long-term value creation intersect in a rapidly evolving regulatory landscape. This conversation was part of a Berkley Life Sciences sponsored series.

Authored by Ken Banta. The Vanguard Network

Ken Banta is the founder and CEO of The Vanguard Network, which he launched in 2014 to support peer-learning, executive advisory work, and leadership development among C suite leaders across industries. A Rhodes Scholar who graduated from Amherst College and Oxford University, Banta previously led global turnarounds and mergers at major healthcare firms before dedicating himself to advising senior executives and building high-performance organizations.
 

Originally published on Substack; republished here with permission, under license without compensation; no further reproduction without permission. Berkley Life Sciences is a sponsor of The Vanguard Network. The Vanguard Network is a trademark of its owner and is used here for identification purposes only. The views expressed are the author’s and do not necessarily reflect the views of Berkley Life Sciences or its affiliates. This content is for general informational purposes only; it is not legal, risk management, or insurance advice. Descriptions, if any, of insurance products are summaries only; coverage is governed solely by the policy as issued and may not be available in all jurisdictions.