Running an AI startup is expensive-data, engineers, and cloud costs add up fast. But if you’re set up right, Delaware offers major tax breaks that help reduce your burn. In 2025, smart founders are using federal and state tax codes to save cash and extend runway.
Tax Code and Legal Reference
- IRC §11 – Flat 21% corporate tax for C-Corps
- IRC §41 – Federal R&D tax credit
- IRC §179 – Deduction for business equipment
- IRC §162 – Deduction for ordinary and necessary business expenses
- IRC §1202 – QSBS exclusion for capital gains on qualified stock
Key IRS and State Forms
- Form 1120 – Corporate tax return
- Form 6765 – Claim the R&D credit
- Form 4562 – Depreciation & Section 179 deductions
- Form 8949 & Schedule D – Report stock sales
- Delaware Franchise Tax – Paid annually by all Delaware corporations
Example: How Tax Strategy Saved Big
Example:
AlphaNex AI spent $180,000 on engineers and servers in 2024. With IRS Form 6765, they claimed an R&D credit of $20,000. They also deducted $25,000 of equipment costs under Section 179. As a C-Corp, they reinvested profits without triggering personal taxes. Their Delaware filing used the Assumed Par Value Method, keeping Franchise Tax under $400.
Step-by-Step: How to Lower Your Taxes
- Claim the R&D Credit (Form 6765)
If you’re building models or writing code, you likely qualify. - Deduct Startup Costs (IRC §195)
First $5,000 is deductible right away. - Write Off Equipment (IRC §179)
Up to $1M of gear, servers, or devices can be fully deducted. - Track All Business Expenses (IRC §162)
Salaries, subscriptions, marketing-everything counts. - Issue QSBS Stock Early (IRC §1202)
If held 5 years, gains may be 100% tax-free. - Use C-Corp Tax Rate (IRC §11)
Federal corporate tax is fixed at 21%, no brackets. - Choose Delaware Franchise Tax Method Wisely
Use the “Assumed Par Value” method to keep your bill low.
Conclusion
Tax planning is a superpower for AI startups. The right structure and strategy can free up thousands each year-money that goes straight into building, hiring, or launching faster. Don’t wait until tax season to plan.
Call to Action
Want to use these tax breaks to grow faster?
Schedule a consultation with Anshul Goyal, CPA, EA, FCA to unlock your startup’s full tax-saving potential.
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Disclaimer
This blog is for educational use only. Consult a licensed tax advisor before making financial decisions.
Anshul Goyal is a U.S. Certified Public Accountant, Enrolled Agent, and Chartered Accountant (India). He helps founders use IRS-compliant strategies to save on taxes and stay audit-ready.
Top 5 FAQs – Tax Savings for AI Startups
1. Can I claim R&D credits for software development?
Yes. Most AI and software work qualifies under IRC §41.
2. What is Section 179?
Lets you deduct full cost of eligible equipment in year 1.
3. Is QSBS available for C-Corps?
Yes. You must hold stock for 5 years and meet the IRS rules under IRC §1202.
4. Can a startup with no revenue claim deductions?
Yes. Losses carry forward to future profitable years.
5. How do I reduce Delaware Franchise Tax?
Use the “Assumed Par Value” method and keep par value low.
About Our CPA
Anshul Goyal, CPA, EA, FCA is licensed in the U.S. and India. He represents clients before the IRS and helps startups optimize taxes, manage filings, and scale with peace of mind.