R&D Activity Incentives Expenses and Credits Under OBBBA
- Immediate Expensing of U.S. R&D (Section 174 Rule Fixed) Domestic research costs are again fully deductible under new Section 174A. Foreign R&D must still be amortized over 15 years.
- Catch Up Provisions. Companies with capitalized domestic R&D expenses from 2022–2024 can elect a catch-up deduction, which could significantly improve cash flow for companies engaged in innovation.
- Small Business Provisions. Eligible small businesses may elect to retroactively apply full expensing to tax years beginning after 2021, allowing them to amend prior returns and recover previously amortized costs.
- Start-Up Company Payroll Tax Offset. Newer companies may still use R&D Credits to recoup payroll taxes paid where they do not yet pay regular tax.
What does the R&D credit cover?
The R&D tax credit is one of the most powerful tax incentives in the tax code. Companies that create, improve or enhance products and processes are eligible. Qualified Research Expenditures come from the activities performed by any persons participating in these efforts and materials used generating permanent tax benefits.
What Industries are Eligible?
Companies in the many industries may qualify.
How we can help your company
We invest time to understanding your business, potential R&D activities, and operations. We do this with a no cost to you feasibility analysis.
What the Act will Provide:
On March 10, 2025, a bipartisan group of lawmakers introduced the American Innovation and R&D Competitiveness Act of 2025 in the U.S. House of Representatives. The legislation aims to restore the immediate deductibility of research and experimental (R&E) expenditures and reverse the amortization requirement imposed by the 2017 Tax Cuts and Jobs Act (TCJA).
1. Restoration of Immediate Expensing: The bill eliminates the mandatory five-year amortization requirement, reinstating the ability of businesses to deduct R&E costs immediately.
2.Tax Credit Adjustments: Changes to Section 280C ensure that businesses claiming R&D tax credits do not receive duplicate tax benefits.
3. Exclusions: The bill does not apply to expenditures related to land acquisition, property improvements, or resource exploration (such as mining, oil, and gas).
4. Optional Amortization: Taxpayers may elect to amortize certain R&E expenses over at least 60 months if they choose.
Industry Opportunity
The following Business Industries are eligible
To be updated shortly.
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How we can help
Through our consultative approach to the research and development tax credit we invest time to understanding your business, potential R&D activities, and operations. We do this with a no cost to you feasibility analysis.
No Cost Feasibility Analysis
Our professionals, with decades of R&D credit experience, will conduct the feasibility analysis to determine the estimated r&d tax credit benefits. Through this analysis we will provide you an estimate of the usability of the credit upfront.
Our Fixed Fees R&D Study
Our fixed fees are based on the scope of a project.
Comprehensive Documentation Support
Documentation is key to success in determining the R&D tax credit. Proper documentation is essential to maintaining and protecting the tax credit and our approach helps substantiate R&D progression, protects company interests, and ensures maximum value.