On August 28, 2025, IRS issued Rev. Proc. 2025-28 relating to the R&D tax credit and R&D expenses under Section 174. Under this new procedure, if you qualify as an Eligible Small Business (gross receipts average of less than $31 million for the period 2022-2024) you may make a “deemed election” to immediately deduct qualifying domestic research expenses on an original return. This allows you to deduct these costs on your 2024 tax return and allows you to go back and deduct any remaining amortized R&D amounts on amended returns for years 2022 and 2023.
If you have already filed your 2024 tax return, you can file a ‘superseded’ return which is still considered an original tax return. Important dates: if your company is an S Corporation, Partnership or LLC (any entity with an original due date of 3/15/25) then the superseded return needs to be filed no later than September 15, 2025. If your original due date was 4/15/25 (C Corporations and Sole Proprietorships), then if you choose the superseded return option, that superseded return needs to be filed by 10/15/25. In some cases such as fiscal year filers, the last date to file a superseded return per the Rev. Proc. is 11/15/25.
If you choose this option (deduct R&D costs on either original 2024 return or 2024 superseded return), then you also must file amended tax returns for years 2022 and 2023 to deduct R&D expenses if you had R&D costs on those returns. For the 2022 taxable year, eligible calendar-year small taxpayers are subject to the standard three-year statute of limitations period to file a refund claim. For the 2023 taxable year, taxpayers only have until July 6, 2026, to amend their returns to apply this election. There is a specific statement your CPA needs to file with the returns.
Another option for both small and large businesses (so all taxpayers) is to deduct any remaining amortized R&D costs from 2022-2024 on your 2025 tax return or spread across your 2025 and 2026 tax returns.Because there are several options depending upon your income and tax projections, we strongly recommend that you meet with your CPA or tax preparer soon to review your options for what is best for your particular situation.
If you are not an eligible small business, then this change in the law (OBBB Act) does allow you to start deducting R&D costs again starting with your 2025 tax return for calendar year taxpayers (i.e., no longer a requirement to amortize R&D costs starting with your calendar year 2025 tax return).