R&D Tax Relief Returns with the One Big Beautiful Bill

The recently passed One Big Beautiful Bill (OBBB) brings important changes that significantly improve how businesses can treat research and development (R&D) expenses for tax purposes. These updates reverse provisions introduced under the Tax Cuts and Jobs Act (TCJA) and offer immediate and retroactive benefits that could have a meaningful impact on your company’s tax position.

Under the prior law introduced by the Tax Cuts and Jobs Act (TCJA), businesses were required to capitalize and amortize R&D expenses over five years for domestic activities (and 15 years for foreign). This treatment applied from 2022 through 2024 and often created cash flow and compliance challenges for many of our clients. 

The OBBB Act has now reversed this requirement. Effective for tax years beginning in 2025—and retroactively applicable to 2022 through 2024—businesses may once again fully expense domestic R&D expenditures in the year they are incurred. This change restores the more favorable pre-2022 treatment and opens up several planning opportunities: 

• Immediate Expensing: You can now deduct qualifying domestic R&D costs in the year they are paid or incurred, improving cash flow and reducing taxable income. 

• Retroactive Claims: Small and medium-sized businesses (with average gross receipts under $31 million) may amend prior returns to retroactively expense R&D costs for 2022–2024, potentially unlocking refunds. 

• Accelerated Write-Offs: For businesses that previously capitalized R&D costs, the OBBB allows for accelerated deductions of any remaining unamortized balances over one or two years. 

If your company has engaged in activities such as product development, process improvement, or technical experimentation, you may qualify for enhanced R&D credits under these new provisions. We are currently reviewing client files to identify opportunities for amended returns and increased credit claims. 

The tax professionals at Haefele Flanagan are available to discuss how these changes may apply to your business and explore strategies to maximize your benefit under the new law. Contact your client manager directly or call us at 856-722-5300.