US R&D Spend Continues to Grow According to BEA Report

The Bureau of Economic Analysis (BEA) has recently released a report examining R&D spending across the nation. The report, which evaluated spend during the 2017 – 2021 tax years, indicated that R&D activity accounted for 2.3% of the U.S. economy in 2021.

In 2021, the country reported R&D spend of $542.7 billion – a massive increase compared to the $378.2 billion spent in 2017. This shows a continuous growth in R&D investments, despite the hard times faced since the onset of the COVID-19 pandemic.

Each state was evaluated and compared, using R&D as a share of each state’s gross domestic product (GDP). On the lower end of the spectrum, Louisiana and Wyoming sat around a 0.3% spend while New Mexico topped the list at 6.3%.

The top 10 R&D producing states account for 70% of the entire country’s spend. California alone accounts for almost a third of U.S. R&D. Other top R&D-producing states include Washington, Massachusetts, Texas, and New York.

The report further analyzed R&D by sector and determined 85% of R&D value added is generated by the business sector, followed by government, and nonprofit institutions serving households. Ofcourse, “Business Sector” is quite a broad category and so the report broke it down further.

Those in the business sector who run professional, scientific, and technical services account for 40% of the sector’s 85%. This was followed by Information services at 15% and chemical manufacturing at 12%.

Are you developing new technology for an existing application? Did you know your development work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? Even if your development isn’t successful your work may still qualify for R&D credits (i.e. you don’t need to have a patent to qualify). To find out more, please contact a Swanson Reed R&D Specialist today or check out our free online eligibility test.

Who We Are:

Swanson Reed is one of the U.S.’ largest Specialist R&D tax advisory firms. We manage all facets of the R&D tax credit program, from claim preparation and audit compliance to claim disputes.

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