R. Kenner French in partnership with Xcel University and Jeff Lenning, explains that U.S. federal and many state governments offer Research & Development (R&D) tax credits—even for work involving artificial intelligence (AI) like ChatGPT, Claude, or custom models. Vast Solutions Group has worked with AI since 2010/2018 and routinely helps small business owners reduce tax liabilities through these credits, noting that his own AI and quantum-computing research time has been effectively “paid for” via credits.
He defines R&D simply: research is investigating how to create something new; development is actually building it. To qualify, activities generally must meet four criteria: aim to make something new or substantially improved; be grounded in science/technology/engineering/math; involve a process of experimentation or trial-and-error; and address technical uncertainty or risk. These rules can apply to many Excel University–style projects and AI initiatives, and some states offer refundable benefits even without state income tax.
Kenner gives practical examples: building a new marketing or analysis system, creating a property/project management tool, and automating workflows. He shares Vast’s own use cases—AI-driven “causations” (workflows), an AI-enabled phone system, a Tax Projection Plus system that forecasts liabilities and suggests legal mitigations, new mobile apps, a client community, and AI-powered customer service/content—much of which earned R&D credits. Claims can often reach back up to three years.
The benefits extend beyond refunds: AI plus R&D credits can confer faster decision-making, competitiveness, time savings, professionalism, and better finances. In a simple illustration, qualifying R&D spending can produce larger savings than a standard deduction and may generate carryforwards. The practical process is: document R&D activities, identify eligible expenses, optimize going forward, and repeat annually. He expects R&D incentives to remain, with bipartisan support and periodic updates.
Kenner closes with a call to action: ask a tax professional whether you’ve been missing out on credits and consider Vast’s resources (eligibility checks and education). He offers a free book to Xcel University participants via email, reiterates that the filing is paperwork-heavy but typically worth it, and emphasizes a broader mission—supporting U.S. competitiveness and human progress by rewarding innovation that many attendees are already doing.
Takeaways
The government provides funding for innovative projects through R&D tax credits.
Many businesses are unaware of the potential benefits of R&D tax credits.
Qualifying for R&D tax credits requires demonstrating innovation and improvement.
Trial and error in development can still qualify for R&D tax credits.
Investing in R&D can lead to significant financial savings for businesses.
Artificial intelligence plays a crucial role in modern business innovation.
R&D tax credits can be claimed retroactively for up to three years.
The financial benefits of R&D tax credits often outweigh standard deductions.
The R&D tax credit is a permanent fixture in the tax code, encouraging ongoing innovation.
Utilizing R&D tax credits can enhance a business's competitive edge in the market.
Sound Bites
You could be getting paid by the government.
Are you doing something new or better?
The federal government has no cap on it.
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