It’s that time of year again. The tax deadlines have passed, your clients have finally exhaled, and now comes the real opportunity: planning ahead.
While most are still catching their breath from 2024 filings, tax professionals know that the best advisory work happens between busy seasons. With the passage of HR 1 (what many in the industry refer to as “OBBB”), 2025 brings significant changes to R&D expensing, bonus depreciation, and energy-related incentives that could impact how you advise clients this year.
Here’s what matters most and how to turn these updates into actionable advisory moments that increase cash flow for your clients.
R&D Expensing Is Back (Mostly)
For the first time since 2021, businesses can once again immediately expense domestic research and development costs.
That change, reversing the Section 174 capitalization rule, was one of the most anticipated outcomes of HR 1. Beginning with tax years starting after December 31, 2024, U.S.-based R&D can once again be deducted in the year it’s incurred, while foreign research must still be amortized over 15 years.
Why it matters
This reinstatement gives software developers, manufacturers, and engineering firms more flexibility and faster cash flow. It also opens new advisory conversations:
- Should clients rethink offshore development arrangements now that domestic R&D brings stronger tax benefits?
- How do startups or pre-revenue tech companies weigh immediate expensing versus capitalization to manage NOLs?
- Are the 2022–2024 returns worth revisiting to capture credits not previously claimed?
Section G: The calm before the storm
The IRS’s new documentation requirement, Section G on Form 6765, has been postponed to 2026. That buys taxpayers one more year to get organized. But don’t wait. Section G will require a “nexus” approach that ties qualified research expenses directly to the business components that drive them. Building that structure now will make 2026 filings far smoother.
Learn more about qualifying activities in our article,
R&D Tax Credit 4-Part Test: How to Know if Your Work Qualifies
100% Bonus Depreciation Returns and Manufacturing Wins Big
Another major headline: 100% bonus depreciation is back for property acquired and placed in service after January 19, 2025.
That’s a significant opportunity for clients considering equipment purchases or facility improvements. Transitional rules apply to projects already under construction, so timing and documentation are key.
A new category: Qualified Production Property
HR 1 also introduced a fresh incentive for U.S. manufacturing. Certain production or refining facilities are now eligible for 100% bonus depreciation on qualifying components. However, not every square foot counts…office, warehouse, and shipping areas are excluded. A cost segregation study is the fastest way to identify what qualifies.
If you haven’t already, bookmark our Cost Segregation page for details, or direct clients to our Cost Seg Feasibility Questionnaire to start the conversation.
Energy Incentives: 179D and 45L Deadlines Are Closer Than You Think
Two of the most powerful energy incentives: 179D (for commercial buildings) and 45L (for residential developers), were both shortened under HR 1.
Projects must now begin construction by June 30, 2026, to remain eligible. This deduction applies not only to building owners but also to architects, engineers, and designers working on government or nonprofit properties that can allocate the benefit.
Section 45L
Developers of energy-efficient residential properties face an even tighter constraint: homes must be sold or leased (placed in service) by June 30, 2026. After that, the credit disappears.
For both incentives, documentation is everything. Identify qualifying projects early and work with an engineer to certify them before those dates pass.
Renewable Energy Credits: Tightened Timelines, Same Opportunity
Solar and wind projects also face newly compressed timelines. Facilities must begin construction by July 4, 2026, and be placed in service by December 31, 2027, to retain full credit value.
The Inflation Reduction Act still provides rich incentives through Sections 45, 48, and 45X, but HR 1 adds additional compliance tests, especially around “substantial construction” documentation and prohibited-entity rules.
For clients pursuing energy generation or manufacturing expansion, now is the time to lock in eligibility and verify wage and apprenticeship compliance.
Turning Policy into Advisory Opportunity
Every line of HR 1 represents a conversation starter. Think beyond compliance:
- Manufacturers can layer bonus depreciation, cost segregation, and 45X manufacturing credits for substantial cash-flow improvements.
- Architects & Engineers: 179D allocations are pure margin, help them act before the mid-2026 cutoff.
- Developers: review 45L-eligible projects to ensure placement before deadlines.
- Tech & Software Firms: re-evaluate R&D capitalization, offshore costs, and potential amended-return opportunities.
This is what true advisory looks like – bringing clients proactive insight while these windows are still open.
Need Help Navigating HR 1?
Tri-Merit’s specialty tax team can help you:
- Model 174 expensing vs. capitalization
- Build Section G documentation systems
- Identify cost-seg and Qualified Production Property opportunities
- Certify 179D and 45L projects
- Validate renewable-energy credit eligibility
Schedule a quick discovery call today:
tri-merit.com/contact
Want to learn more? Watch our recent webinar, which discusses strategies to maximize 2025 opportunities.
