SR&ED Calculator 2026: Tax Credit Estimator

This SR&ED calculator estimates your federal investment tax credit and your provincial R&D credit for a tax year beginning after December 15, 2024. It applies the 35% enhanced rate on up to $6 million of qualified spending, the 15% basic rate above that, the 55% proxy for overhead, and 80% of arm's-length contractor costs.

How is the SR&ED tax credit calculated?

The calculation has three steps. First, add up qualified expenditures. Second, work out the provincial credit, because the CRA treats it as government assistance that reduces your federal base. Third, apply the federal rates to what is left, splitting it at your expenditure limit.

Qualified expenditures = SR&ED salaries + materials + 80% of arm's-length contracts + overhead (55% of salaries under the proxy method) + capital equipment.
Provincial credit on those expenditures, using the province's own rules (table below).
Federal ITC = 35% of the reduced base up to the expenditure limit, plus 15% of anything above it.

Federal SR&ED rules used (as of October 2026)

Rule	2026 value	Source
Enhanced ITC rate (CCPCs, eligible Canadian public corporations)	35%	CRA ITC policy
Basic ITC rate (above the limit, other corporations)	15%	CRA ITC policy
Expenditure limit (tax years beginning after Dec 15, 2024)	$6 million, phased out over prior-year taxable capital of $15M to $75M	CRA ITC policy
Refund, CCPC current expenditures within the limit	100%	CRA ITC policy
Refund, capital expenditures within the limit	40%	CRA ITC policy
Refund of the 15% credit, qualifying CCPC	40% (taxable income at or below $500,000 × ($60M − A) ÷ $60M)	CRA ITC policy
Proxy method overhead (PPA)	55% of the salary base	CRA PPA policy
Arm's-length contracts	80% eligible for the ITC	CRA T4088 guide

Provincial credits used (as of October 2026)

Province	Credit in the calculator	Source
Ontario	OITC 8% refundable on up to $3M (CCPCs; phased out by taxable income $500k to $800k and taxable capital $25M to $50M) plus ORDTC 3.5% non-refundable	Ontario
Quebec	CRIC 30% between the exclusion threshold and $1M, 20% above; refundable	Quebec
British Columbia	10%; refundable up to the $6M limit for CCPCs and eligible public corporations	B.C.
Alberta	Innovation Employment Grant: 8% up to the two-year average, 20% above, on up to $4M; phased out by taxable capital $10M to $50M	Alberta
Saskatchewan	10%; refundable for CCPCs on the first $2M; total credit capped at $1M a year	Saskatchewan
Manitoba	15%, half refundable for in-house work	CRA provincial page
New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon	15%, refundable	CRA provincial page
P.E.I., Northwest Territories, Nunavut	No R&D credit	CRA provincial page

For more detail on each province, see our guide to provincial SR&ED tax credits. For the $6 million limit and how it phases out, see the 2026 SR&ED expenditure limit.

What the calculator leaves out

A real claim depends on which work qualifies, not only on what you spent. The CRA looks for a technological uncertainty, a systematic investigation and evidence kept as the work happened. Other details that change the number:

Associated companies share one expenditure limit.
Specified employees (people who own 10% or more of a class of shares) have a capped salary base for the proxy method.
Costs still unpaid 180 days after year end drop out of the claim.
Capital equipment later sold or moved to commercial use can trigger ITC recapture.
Claims must be filed within 18 months of the tax year end. Our SR&ED deadline calculator works out your date.

Not sure which of your work qualifies?

We prepare your SR&ED claim from your own engineering records, and an experienced reviewer checks every line before you file.

Frequently asked questions

How much is the SR&ED tax credit?

Canadian-controlled private corporations (CCPCs) and eligible Canadian public corporations earn a 35% federal investment tax credit on up to $6 million of qualified SR&ED expenditures a year. Spending above that limit, and spending by other corporations, earns 15%. Most provinces add their own credit of 3.5% to 30%, which is calculated first and reduces the federal base.

Is the SR&ED refund taxable?

Yes, indirectly. Federal and provincial investment tax credits are government assistance. They are not added to income directly, but they reduce your SR&ED expenditure pool (or the cost of capital property) in the following tax year, which increases taxable income. Provincial credits also reduce the federal base in the year you claim them. Ask your accountant how this affects your return.

What is the SR&ED proxy method?

The proxy method lets you claim overhead without tracking it. Instead of listing actual overhead costs, you add a prescribed proxy amount (PPA) equal to 55% of the salary base of employees directly engaged in SR&ED. Bonuses and taxable benefits are excluded from that base, and specified employees (major shareholders) have a cap. Most small claimants use it because it is simpler and often higher.

Is the SR&ED tax credit refundable?

For CCPCs, the 35% credit on current expenditures is fully refundable, so it is paid in cash even with no tax owing. The 35% credit on capital is 40% refundable. Qualifying CCPCs (prior-year taxable income under about $500,000) also get 40% of the 15% credit refunded. Eligible Canadian public corporations get the 35% credit refunded within their limit. For other corporations the credit is non-refundable.

Do contractor costs count for SR&ED?

Payments to arm's-length contractors for SR&ED done on your behalf in Canada count, but only 80% of the amount is eligible for the investment tax credit. Payments to non-arm's-length contractors (related companies) do not earn a credit for the payer. Quebec's CRIC counts 50% of subcontract payments for work done in Quebec.

SR&ED tax credit calculator 2026 rules