---
title: R&D credit payroll offset for startups | Tenax Accounting
description: "Free infographic: when the R&D credit payroll tax offset starts, who qualifies, and which QREs your books need to show. Light and dark versions."
image: https://tenaxaccounting.com/hubfs/tenax-rd-payroll-offset-light.png
---

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# Offset your payroll taxes with the R&D credit

For med device startups that qualify for the R&D credit but don't owe income tax yet. When the payroll offset starts, who qualifies, and which QREs your books need to show.

[Download light ↓](https://tenaxaccounting.com/hubfs/tenax-rd-payroll-offset-light.png)[Download dark ↓](https://tenaxaccounting.com/hubfs/tenax-rd-payroll-offset-dark.png)

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![When the research and development credit payroll offset starts for tax year 2026, who qualifies, and which qualified research expenses (QREs) your books need to show. Tenax Accounting infographic](https://tenaxaccounting.com/hs-fs/hubfs/tenax-rd-payroll-offset-light.png?width=1600&height=1400&name=tenax-rd-payroll-offset-light.png)

## The short version

**Who qualifies:** under $5 million in gross receipts for the year, and no gross receipts before the five-year period ending that year.

**How much:** up to $500,000 of the credit a year, against the employer share of Social Security first, then Medicare.

**When it starts:** the first calendar quarter after the income tax return with the election is filed.

**For 2026:** a return filed in September 2027 starts with October payroll. Filed in October, it waits until January 2028.

**What counts:** research wages, supplies used up in research, 65% of contract research, and cloud computing for research.

**What your books need:** QREs tracked as they happen, not rebuilt in September.

## Questions

What is a QRE?+

A qualified research expense. It's a cost of doing qualified research in the US: wages for research work, supplies used up in research, 65% of contract research, and cloud or computer rental used for research. QREs are the base for the federal R&D credit.

Can a startup use the R&D credit if it doesn't owe income tax?+

Often, yes. A qualified small business, with under $5 million in gross receipts for the year and no gross receipts before the five-year period ending that year, can elect to use up to $500,000 of the credit a year against employer payroll taxes.

When does the payroll offset start?+

In the first calendar quarter that begins after the income tax return with the election is filed. For tax year 2026, a return filed in September 2027 starts the offset with October 2027 payroll. A return filed in October 2027 starts it in January 2028.

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