The Question

Most people focus on the last three words: research activities.

Very few pause on the first one: increasing.

That omission is the root of a lot of confusion — and more than a few bad R&D credit outcomes.

The Short Answer

The R&D credit is not designed to reward doing R&D.

It is designed to reward doing more R&D over time.

That concept is built directly into the statute, the calculations, and the way the credit scales year over year.

Ignoring the “increasing” part leads to:

• unrealistic expectations,

• misinterpretation of credit amounts,

• and frustration when results don’t match assumptions.

Why the Credit Was Structured This Way

At its core, the R&D credit is an incentive — not a reimbursement.

Congress designed it to encourage companies to:

• expand technical effort,

• take on more uncertainty,

• and invest progressively in innovation.

That’s why the credit compares current-year qualified research expenses to some form of historical baseline.

The baseline matters because growth matters.

What “Increasing” Looks Like in Practice

“Increasing” does not mean:

• every year must be larger than the last,

• or that a single down year eliminates future credits.

It does mean that:

• historical spending affects current results,

• methodology choices compound over time,

• and base-year treatment has long-term consequences.

Two companies with identical current-year R&D spend can generate very different credits depending on their past.

That’s not a bug — it’s the point.

Why This Trips Companies Up

This concept is often overlooked because:

• early discussions focus on eligibility, not mechanics,

• providers emphasize upside without explaining baselines,

• and companies assume credits scale linearly with spend.

They don’t.

Understanding the “increasing” aspect is what separates:

• one-time credit chasing
  from

• sustainable, systemized R&D strategies.

Why This Matters for Long-Term Planning

Once companies understand this, a few things change:

• they stop treating R&D credits as transactional,

• they care more about consistency than spikes,

• and they think harder about documentation and methodology.

This is also why poorly constructed first-year studies can haunt future years — and why thoughtful ones compound value.

The Takeaway

The R&D credit rewards growth, not just activity.

The word increasing isn’t marketing language. It’s the organizing principle behind the entire credit.

Companies that understand that early:

• set better expectations,

• make better methodological decisions,

• and get more durable value over time.

Those that ignore it often spend years trying to unwind early assumptions.