Most business owners know ADP as the world’s biggest payroll provider. But few realize that ADP also helps companies recover tens or even hundreds of thousands of dollars each year through the R&D (Research & Development) Tax Credit—a federal and state incentive designed to reward innovation.
Most business owners know ADP as the world’s biggest payroll provider. But few realize that ADP also helps companies recover tens or even hundreds of thousands of dollars each year through the R&D (Research & Development) Tax Credit—a federal and state incentive designed to reward innovation.
recently sat down with Blake from ADP, who leads their R&D tax credit practice, to unpack how this program really works—and how to avoid the scams and shortcuts that can land you in trouble.
What the R&D Tax Credit Actually Covers
The R&D Tax Credit applies to companies spending time, money, and resources developing or improving products, processes, or software.
That includes:
- Building new software or improving existing tools
- Developing internal systems or automation
- Creating or refining manufacturing techniques, formulas, or inventions
If your team includes engineers, developers, or designers—and you’re tracking work in tools like Jira, Basecamp, or ClickUp—you could qualify.
“It’s a state and federal tax credit designed to lower a business’s tax liability,” Blake explained. “Our goal is to encourage more companies to invest in innovation by returning a portion of that spend.”
Avoiding the “AI Can Do It All” Scams
Blake warned that the R&D credit space is full of shady operators promising easy refunds through “AI software” that supposedly documents everything for you.
ADP takes the opposite approach:
“We have nearly 300 tax credit specialists—attorneys, accountants, engineers, scientists—who personally review your projects,” Blake said. “We match your industry to the right expert to make sure your claim holds up if the IRS ever looks at it.”
That human-driven, audit-ready process matters. The government has cracked down on automated claims and vague filings that don’t properly document how the R&D work was performed.
How Much You Can Get Back
Eligible businesses can often claim 6–8% of qualified research expenditures (“QREs”), which include:
- Employee wages for those directly involved in or supervising R&D
- Contractor or 1099 costs tied to research or product development
- Supplies and materials used during development
- Cloud hosting and computing costs (including AI model usage or OpenAI credits)
Example: If you spent $500,000 last year across those categories, you might recover $30,000–$40,000 in tax credits.
ADP’s fee never exceeds 25% of the gross credit, and there’s no upfront cost to find out if you qualify.
What About Startups?
Here’s the best part for early-stage founders and agencies building AI tools: even if you’re not profitable yet, you can still benefit.
The R&D credit can be carried forward up to 20 years, and newer companies (under five years old, under $5M in revenue) can use it to offset payroll taxes directly.
That means real cash savings even before you hit profitability.
“If you’re within your first five years and under $5 million in gross receipts,” Blake said, “you can apply the credit against payroll tax liability—something ADP can handle in real time.”
ADP’s “Real-Time Redemption” System
For companies already using ADP for payroll, this process is seamless. Their Real-Time Redemption feature applies your approved tax credit automatically to offset payroll taxes instead of waiting months for an IRS refund check.
It’s fast, compliant, and built into the system you’re already using.
Why This Matters for Agencies and SaaS Builders
At BlitzMetrics, we see agencies, startups, and software teams constantly investing in automation, AI models, and data infrastructure—all of which often qualify for R&D credits. But most never claim them simply because they don’t know how.
This is one of those cases where education equals money. Two-thirds of eligible businesses never file, mostly out of confusion. ADP’s process fills that knowledge gap while handling the compliance side.
If you’re running payroll, funding dev work, or training AI models that make your systems smarter, you’re probably leaving free money on the table.
Want to See If You Qualify?
Blake’s team at ADP can walk you through a quick “back-of-the-napkin” estimate—no cost, no obligation.
👉 Learn more about ADP’s R&D Tax Credit Program:
Bottom Line: If you’re innovating, you should be getting rewarded for it. ADP’s human-first, audit-safe approach to the R&D Tax Credit makes it easy for startups and established firms alike to recover money they’ve already earned through innovation.
Interview conducted by Dennis Yu at DigiMarCon. Republished with permission on BlitzMetrics.com.
Dennis Yu
Dennis Yu is the CEO of Local Service Spotlight, a platform that amplifies the reputations of contractors and local service businesses using the Content Factory process. He is a former search engine engineer who has spent a billion dollars on Google and Facebook ads for Nike, Quiznos, Ashley Furniture, Red Bull, State Farm, and other brands.
Dennis has achieved 25% of his goal of creating a million digital marketing jobs by partnering with universities, professional organizations, and agencies. Through Local Service Spotlight, he teaches the Dollar a Day strategy and Content Factory training to help local service businesses enhance their existing local reputation and make the phone ring.
Dennis coaches young adult agency owners serving plumbers, AC technicians, landscapers, roofers, electricians, and believes there should be a standard in measuring local marketing efforts, much like doctors and plumbers must be certified.