Companies in a wide range of industries have expanded the use of 3D printers to benefit their operations. The continued growth of 3D printing is driven by new and improved printers, new printing applications, and new printing materials. End users purchase 3D printers to improve designs and develop individual parts and whole products that were historically challenging or costly to manufacture. Due to the rapid expansion of this innovative technology, businesses using 3D printers are typically eligible for substantial R&D tax credits.
The Research & Development Tax Credit
Enacted in 1981, the Federal Research and Development (R&D) Tax Credit allows for a credit of up to 6.5% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
- New or improved products, processes, or software;
- Technology in nature;
- Elimination of uncertainty;
- Process of experimentation.
Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 19, 2014, President Obama signed the bill extending the R&D Tax Credit for the 2014 tax year.
R&D Opportunities for 3D Printing End Users
The number of innovative uses of a 3D printer and 3D printed parts are immense. The specific credit-eligible activities possible using the innovative applications of 3D printing is limitless. Despite this limitless opportunity, many companies are harnessing 3D printers for specific R&D activity. These companies range in industry and size, but often see immediate benefits to 3D printing over traditional methods. The remainder of the article will outline specific areas where 3D printing capabilities are expanding the scope of R&D for current and future businesses.
3D printing is expected to completely revolutionize traditional production produces in the manufacturing industry. The full implementation of this disruptive technology is still dependent on 3D printing technology maturing further. Despite the fact that we may be years from individually printed cars, trains, and airplanes, modern manufacturers are taking advantage of 3D printers and its many uses. By harnessing the additive processes of 3D printers, manufactures are developing prototypes much more rapidly than before. Although rapid prototyping has benefits many industries, manufacturers are able to speed up the pace of product development by prototyping products without designing entire manufacturing processes or outsourcing the prototype development to custom manufacturers. Manufacturers that work to implement 3D printers as a disruptive technology on industrial scales will qualify for substantial R&D Tax Credits. In addition, manufacturers that harness 3D printing capabilities to rapidly develop prototypes and reduce their reliance on custom manufactures will also be eligible for R&D Tax Credits. The reallocation of resources saved using 3D printers may also be parts of larger process improvement projects which likely add to the eligible R&D expenses incurred by these manufacturers.
When using 3D printers on all scales, advanced scanning and/or Computer Aided Design (CAD) are key procedures. Before physical models can be printed, they must be rendered using a range of available 3D software. When developing virtual 3D models using CAD, it is commonplace that engineers, and even do-it-yourself (DIY) designers, go through an exhaustive number of iterations before many designs can be realized. The time spent by engineers and software professionals developing CAD renderings of 3D printed prototypes and mockups qualifies as R&D expenses.
Like the manufacturing industry, the medical industry has many current and future uses for 3D printing technology. As 3D printing technologies mature, medical device designers are harnessing the technology to develop improved prosthetics. Some still see artificial organs as science fiction, but a group of Italian researchers estimate artificial eyeballs will be available by 2027. In addition to such lofty goals, 3D printers have already been used to create prosthetic ears, kidneys, and other organs.[ii] As medical device manufacturers focus on more creative and life-changing uses for 3D printing, a majority of their expenses may qualify for lucrative R&D Tax Credits.
Materials consumed during R&D activities are considered Qualified Research Expenses (QREs). For all prototypes, mockups, or experimental products created by 3D printers, the materials used in the additive manufacturing are eligible QREs. A variety of materials are used in 3D printing. 3D printed materials include plastics, metals, charged plastics, resins, multicolor materials, and ceramics.[iii] NASA has even awarded a Small Business Innovation Research (SBIR) contract to Systems and materials research Consultancy of Austin, Texas to develop 3D printing systems using food as the printed material in space.[iv]
Some sources project the 3D printing industry to exceed $16 billion by 2018.[v] As the 3D printing market continues to experience rapid growth, the capital cost of 3D printers and material will gradually decrease. This will allow for more business to take advantage of innovation possible with additive manufacturing. Whether it is small architectural companies developing building models or fashion designers printing new clothing lines, the possible application of 3D printing is endless. Past, present, and future companies investing in 3D printers should be aware that R&D Tax Credits are available to help offset the initial investment cost of this innovative technology.
[i] “3D Printing and the Future of Manufacturing.” CSC, Leading Edge Forum Technology Program. Fall 2012
[ii] “Wi-Fi EYE: Scientists Developing 3D-printed Eyeballs with Filters & Cameras.” RT Network, 21 Apr. 2015.
[iii] Cabanis, Romain, “The Full List of 3D Printing Materials Available at Sculpteo”, Sculpteo Blog, 11 Mar. 2015
[iv] “3D Printing: Food in Space.” NASA, NASA, 23 May 2013.
[v] “3D Printing Market to Grow to US$16.2 Billion in 2018.” Canalys, 31 Mar. 2014. http://www.canalys.com/newsroom/3d-printing-market-grow-us162-billion-2018#sthash.jovzItNE.dpuf