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Potentially—but buying, owning, or using AI infrastructure does not by itself qualify a business for the U.S. federal research credit. Under Internal Revenue Code Section 41, the business must establish qualifying research for each relevant business component and substantiate the expenses it claims. Whether GPUs, servers, or cloud-computing charges count depends on the work performed, the way the infrastructure was provided and used, and the records supporting the allocation.
Does AI development qualify for the federal research credit?
It can, if the research meets Section 41’s requirements. The label “AI,” “machine learning,” or “model training” is not enough: the test applies separately to each business component, such as a product, process, software component, or technique. The IRS Form 6765 instructions dated December 2025 describe four requirements:
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- Permitted purpose: The work is intended to develop or improve the taxpayer’s business component.
- Technological in nature: The research relies on principles of physical or biological science, engineering, or computer science.
- Uncertainty: The work addresses uncertainty about the capability, method, or appropriate design for developing or improving the component.
- Process of experimentation: The work substantially involves evaluating alternatives through a process of experimentation related to the intended improvement.
For an AI project, records should make those elements understandable in the context of the particular component. For example, they should identify the technical uncertainty the team faced, the alternatives it considered or tested, what it sought to improve, and how the work addressed the uncertainty. A project name or the fact that a team trained a model does not establish these points.
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Sometimes, depending on the facts. The IRS audit guidance recognizes amounts paid for the right to use computers in qualified research as a possible in-house research expense. That general category does not settle how every current GPU rental, cloud service, colocation arrangement, bundled platform charge, or owned server should be treated. The contract, cost characterization, actual research use, tax year, and method used to allocate mixed-use costs all matter.
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| Infrastructure situation | What to examine |
|---|---|
| Owned servers or GPUs | Buying equipment does not establish that its cost is a qualified research expense. Identify the expense being claimed, the equipment’s actual research use, and any use for production or other activities. |
| Rented computer or GPU access | Determine what the contract provides and whether the charge is for the right to use a computer in qualified research. The IRS’s general computer-use guidance does not automatically resolve every modern rental arrangement. |
| Separately stated cloud compute | Review the service terms, the nature of the charge, and records tying use to qualifying research. A separately listed compute charge is not automatically eligible. |
| Bundled cloud platform or colocation service | Assess what the bundle includes and whether a supportable allocation can separate research-related use from other services or activities. The reviewed IRS guidance does not provide a blanket rule for these bundles. |
| Research and production use on the same infrastructure | Keep a traceable basis for distinguishing experimental research from commercial production, routine deployment, and other nonqualifying work. Mixed use does not make the entire cost a research expense. |
These are fact patterns to analyze, not IRS safe harbors or a ranking of which infrastructure model is more likely to qualify. A tax professional should review the relevant contracts and the business’s actual use before a claim is prepared.
Which expenses may be included?
IRS materials identify several potential expense categories when their applicable requirements are met:
- Wages for qualified services performed in qualified research, subject to the rules for the claimed expense.
- Supplies used in qualified research.
- Amounts paid for the right to use computers in qualified research.
- Qualifying contract research expenses, subject to applicable rules.
These categories are not a reason to treat a project’s entire budget as eligible. The business must connect the claimed amount to qualifying research and separate it from general administration, commercial production, routine deployment, and other work that does not qualify.
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What research activities are excluded?
The IRS Form 6765 instructions list exclusions and limitations that can affect an activity even when it is technical. They include:
- Research conducted after commercial production begins.
- Adapting an existing product or process to a particular customer’s needs.
- Duplicating an existing product or process.
- Surveys or studies.
- Certain research relating to internal-use software.
- Research conducted outside the United States or a U.S. territory.
- Research funded by another person or a government entity.
The precise rule can depend on the activity and any applicable statutory exception. A business should not assume that every activity within an otherwise eligible project qualifies, or that a project’s funding arrangements are irrelevant.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What records should a business keep?
For a research-credit refund claim, IRS guidance calls for identifying each business component, the research activities for each component, the individuals who performed those activities or their titles or positions, and the information each sought to discover. The documentation should let a reviewer follow the connection from the component and technical work to the people, expenses, and claim.
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Useful supporting records can include:
- Project descriptions that identify the business component, intended improvement, and technical uncertainties.
- Design documents, experiment plans, test results, model or system evaluations, and records of alternatives considered.
- Employee activity records and wage support that help show who performed the work and what services they provided.
- Infrastructure invoices, contracts, and usage records that show what was purchased or accessed and how it was used.
- Outside-research agreements and related records that show the work performed and how it was funded.
- A consistent, traceable method for allocating costs when resources or employee time supported both research and other activities.
These examples describe practical support, not a single mandatory record format for every business. Contemporaneous records that connect technical activity and costs are more useful than a project label or a total spending figure with no explanation.
How does a business claim the credit?
Form 6765 is used to figure and claim the research credit. The relevant form and instructions can change by tax year, and an entity’s filing process may affect how the claim is prepared. Use the version that applies to the return at issue and have a qualified tax professional assess the research, expense treatment, documentation, and any refund-claim requirements before filing.
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