The Canadian and US technological landscapes are evolving rapidly, with internet and SaaS companies leading the way to innovation. For years, the SaaS industry has dominated funding claims, primarily because past iterations of the program focused on innovation. From research and development (R&D) to infrastructure scaling, the internet and SaaS companies have utilized the funding to support growth and scalability.
However, today, the way companies fund innovation and technical development is transforming. According to the recent Boast 2026 R&D Tax Credit Benchmark Report, companies across North America are leveraging incentives and grants to fund Research and Development. For instance, in 2024, innovative companies secured more than $900 million in R&D tax credits, with average claims increasing to 245% since 2018, reaching $768,233.
“The kind of increase in average claim values and the millions of dollars secured in a single year sends a clear message that companies are becoming far more strategic about how they fund innovation,” said Imad Jebara, CEO at Boast.
This shift highlights how the R&D trend is moving from SaaS to a multi-industry innovation ecosystem in 2026.
What the Data Reveals About SaaS Dominance
According to the 2026 R&D Tax Credit Benchmark Report released by Boast, Software and internet companies account for 80.6% of all claims, with the lowest audit rate at 5.28%. Eligible companies can claim more than 13% of their research and development expenses to grow and scale their businesses. These stats not only show how fast the SaaS industry has grown over the years, but also how these earlier funding programs have favored digital innovation.
Traditionally, SaaS and internet companies that have focused on innovation, technical development, and iterative product improvements align well with the eligibility criteria for claiming R&D tax credits. In fact, eligible companies can claim more than 13% of their research and development expenses to grow and scale their businesses.
However, in the coming years, we expect these numbers to shrink by 80%. It is not because the SaaS industry is lacking innovation, but because other industries are emerging with technologies and innovation that may take up a larger share going forward.
Where SaaS Companies Are Benefiting from R&D Tax Credits
While still underutilized, R&D tax credits are helping many internet and SaaS companies drive innovation in the competitive tech landscape. Using these impactful funding opportunities, companies are:
- Funding research and development (R&D) and business expansion in international markets.
- Developing SaaS platforms and launching new products.
- Developing softwares for energy management.
- Funding talent acquisition and subsidizing salaries.
- Funding cloud and infrastructure scaling.
A Shift Toward a More Diverse Innovation Ecosystem
Despite the dominance, the stats and data point to a shift towards a more diverse innovation ecosystem. Where SaaS and internet companies claim a chunk of tax credits, innovation is not limited to the software industry. Here are some of the emerging sectors:
- Manufacturing: With its focus on process improvement, automation, material testing, and machinery upgrades, the manufacturing industry accounts for 4.3% of R&D tax credit claims, with an audit rate of 16.84%.
- BioTech and Healthcare: With funding focused on diagnostic tool development, drug formulation, medical device prototypes, and experimentation, the industry accounts for 2.4% of R&D tax credit claims and has an audit rate of 14.11%.
Traditionally, SaaS and internet companies accounted for most tax credit claims. Still, we are witnessing a shift toward a more diverse ecosystem, with other industries taking a fair share in driving innovation. This shift is not about the SaaS industry lacking innovation; it is about other industries, such as AI, manufacturing, biotech, and gaming and digital media, catching up with the latest developments in the ever-evolving technological landscape.
