R&D Tax Credit

Jun 5, 2026

The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, restores immediate expensing for domestic R&D costs under new Section 174A and reverses the prior requirement to capitalize and amortize these expenses beginning in 2022; importantly, eligible taxpayers can retroactively apply this treatment to 2022–2024 by filing amended returns under Rev. Proc. 2025-28, allowing full deductions in the year incurred and potentially generating refunds or increasing net operating losses, but action must be taken by July 6, 2026 or earlier if the statute of limitations applies; taxpayers also have a limited opportunity to make or revoke a Section 280C election for those same years, which directly affects how R&D deductions interact with the R&D credit and can materially impact overall tax outcomes; if no action is taken, expenses remain subject to unfavorable amortization rules and the opportunity to optimize both deductions and credits is effectively lost....

Jul 8, 2025

The One Big Beautiful Bill Act (OBBBA) reestablishes same-year deductions for domestic research expenses beginning in 2025. Under new IRC §174A, U.S. companies can fully expense qualified R&D costs immediately, significantly improving the cash flow benefits of innovation investments. Foreign research, however, remains subject to 15-year amortization. Optional 60-month amortization is also available, and the shift to immediate expensing is treated as an automatic accounting method change....

Jun 28, 2024

The IRS recently announced several notable changes to the process of claiming the R&D Tax Credit, announcing welcome reductions to requirements for filing amended R&D Credit claims and reduced requirements for the proposed Form 6765. In response to feedback, the IRS has revised the draft Form 6765 and has also waived some of the requirements for refund claims. These changes aim to reduce taxpayer burden while maintaining an improved level of information received for tax administration. The revised Section G of Form 6765 will also be optional for all filers for tax year 2024 and will become effective for tax year 2025....

May 8, 2024

The recent MBJ v. Commissioner ruling highlights the important role of contract language in determining eligibility for Research and Development (R&D) Credits. MBJ, a structural engineering firm, had $190,000 in credits disallowed due to inadequate contract language. Although MBJ's contracts allowed for phase inspections and termination for substantial failure to perform, they lacked explicit provisions making payments contingent on the success of R&D efforts or refunding payments if the client found the work deficient. ...

Mar 26, 2024

On Thursday, March 21, the Senate Finance Committee held a hearing on the Biden 2025 Budget Proposal, questioning Treasury Secretary Janet Yellen on various aspects of the proposed budget, with many members noting concern about the proposed increase of the corporate tax rate and aspects of the budget that would have a negative impact on various American manufacturing industries. After weeks of silence from the Senate, many members of the committee stated their desire to see the tax bill (H.R. 7024) passed while urging Yellen and the administration for more aggressive incentivization of R&D in the US, which falls short in incentivizing R&D when compared to countries, specifically China....

Jan 18, 2024

The proposed Tax Relief for American Families and Workers Act of 2024 changes the period for when companies must start the five-year period for the deduction of research and experimental expenditures from tax years beginning after December 31, 2021, to tax years beginning after December 31, 2025....

Sep 21, 2023

On September 8, 2023, the Internal Revenue Service (“IRS”) and Department of the Treasury (“Treasury”) released an advance version of Notice 2023-63. This Notice provides interim guidance intended to clarify the amortization and capitalization of specified research and experimental (“SRE”) expenditures under Section 174, amended by the Tax Cuts and Jobs Act (TCJA) in 2017. Proposed regulations provide rules consistent with the guidance for tax years ending after September 8, 2023. Until those regulations are provided, tax professionals can rely on interim guidance....

Sep 15, 2023

An Internal Revenue Service new release previews proposed changes to certain sections of Form 6765, Credit for Increasing Research Activities, commonly known as the Research & Development (R&D) tax credit. The IRS is soliciting feedback in the absence of the formal draft release process for form changes. The changes are in line with proposed changes that were previously announced in 2022. ...