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.

Swanson Reed regularly hosts free webinars and provides free IRS CE and CPE credits for CPAs. For more information please visit us at or contact your usual Swanson Reed representative.

Recent Posts