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Section 174 OBBB R&D Tax Changes – Frequently Asked Questions

R&D Tax Credit Studies

Overview of Section 174 Changes Under OBBB

  • Immediate deductibility for domestic R&E expenses starting in 2025.
  • Optional retroactive deductibility for eligible taxpayers for 2022–2024.
  • Continued capitalization for foreign R&E expenses under TCJA.
  • New election options and filing requirements.
  • Awaiting further IRS guidance—expected before the 2025 tax season.

 

Updated August 27, 2025

General Treatment of R&E Expenses

Do taxpayers have to deduct current year domestic R&E expenses beginning with 2025?

No. Taxpayers may elect to:

  • Deduct immediately,
  • Amortize over ≥60 months, or
  • Use 10-year writeoff under Section 59(e)(2)(B).

Retroactive Deductibility (2022–2024)

No, it’s optional. Eligible and non-eligible taxpayers may:

  • Deduct in 2025 or over 2025–2026, or
  • Continue amortizing under TCJA.

Recording and Reporting Requirements

The OBBA is unclear about this. Possibly. Especially for those claiming the Section 41 R&D credit. Await IRS guidance.
Depends on whether electing retroactive deductibility or amortizing. Await guidance before filing.

Election Mechanics

The OBBA is unclear about this. Possibly. Conservative approach is to capitalize first, then amend. Await IRS guidance.
Recommended. At minimum, use a reasonable estimate beyond Section 41 qualified research expenses.
The OBBA is unclear about this. Await guidance. Conservative approach is to elect for all years or none.

Amended Returns & Form 3115

Include:

  • Statement of election,
  • Possibly Form 3115 if treating as a change in accounting method,
  • Use DCN Code 17 or “Other” on Form 3115.

Section 280C Considerations

No. They may make or revoke a Section 280C election on amended returns.
Eligible taxpayers must either:

  • Make a retroactive Section 280C election, or
  • Reduce deductible expenses by the full credit.

Section 59(e) Elections

Only for 2024 returns filed before the due date (including extensions). Not allowed for 2022–2023.

Claiming the R&D Credit

The OBBA is unclear about this. Statutory language supports this, but await guidance before filing.
Only if the credit amount increases from the original return.

Why Tri-Merit for Your R&D Tax Credit Study?

It’s important to feel confident in your choice of specialty tax partner. R&D tax studies require technical and engineering expertise as well as tax know-how.

Our team of CPAs, engineers and attorneys combine technical expertise with strong core values and a client-centered approach. We make your life easier by taking a customizable, flexible, and thoughtful approach to produce the best possible outcome. We engage clients in the most efficient and effective way possible, requiring minimal time and effort that results in a refreshingly simple process.

Risk Free

Our no-cost feasibility analysis determines how much you can expect to qualify for before committing to a contract. There’s only a fee if you decide to move forward with a study. Moreover, Tri-Merit assumes the risk; we’ll defend your credit should an audit occur.

Technical Expertise

Our in-depth knowledge of current IRS rules and regulations—combined with technical expertise in manufacturing, software development, engineering and tech startups—makes Tri-Merit a smart choice when you need to go beyond typical compliance work.

We Make It Easy

Working with Tri-Merit is a breeze. If you’re a public accounting firm that needs a third-party specialist to conduct a tax study, we will align our processes with yours to serve as an extension of your advisory team. If you’re a business that wants to claim R&D tax credits, we customize our approach to streamline collaborative efforts between you, your CPA and Tri-Merit.

Reliable & Transparent

Our team provides regular updates, so you are aware of the progress of the study. Expect the report to be completed and delivered by the deadline. With more than 35 years of experience, we have provided thousands of successful studies across the country.

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Be confident in the R&D tax credit partner you choose. Choose Tri-Merit.

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