In July 2025, the One Big Beautiful Bill Act (OBBB) delivered overdue relief to Taxpayers investing in domestic research and experimentation (R&E). If you are not caught up on these changes check out our article Section 174 Expensing Restored Under OBBB”.
OBBB also left Taxpayers and practitioners with many questions regarding the practical implementation of the new legislation.
IRS Issues Rev. Proc. 2025-28
Cue the newly released Revenue Proc 2025-28, which outlines procedures for making certain elections under the OBBB for domestic research or experimental expenditures. Rev. Proc. 2025-28 provides the necessary guidance, elections and statements that large taxpayers will need to implement on their 2025 returns to resume full expensing. Most critically, we received guidance regarding steps small taxpayers must take to retroactively expense R&E.
Small taxpayers are on a tight timeline to file the necessary amendments with accompanying elections if they want to retroactively claim relief from domestic Section 174 amortization and depreciation. From the initial OBBB legislation, we were aware that Taxpayers making the small business election under the OBBB only had until July 6, 2026, to file amended returns with the necessary elections. However, the new guidance clarifies that some Taxpayers have an even shorter window for filing Tax Year 2022 amendments. OBBB did not modify or provide an exception to the statutory period of limitations on filing a claim for the credit or refund for the purposes of elections under OBBB. If a Taxpayer filed their 2022 tax return in the spring of 2023, that Taxpayer’s deadline to amend the 2022 Tax Return for a small business treatment for Section 174 would likely fall before the July 6, 2026, deadline. For example, if a calendar year-end C-Corporation timely filed their 2022 Tax Return by April 15, 2023, then their statute for amending the 2022 tax return will run on April 15, 2026.
This puts pressure on Taxpayers and their advisors to examine the most advantageous application of the options available to small businesses under OBBB. An eligible taxpayer making an election under OBBB generally must file an amended return for each taxable year affected by such elections, so small business Taxpayers are required to apply the election across all relevant tax years, rather than selectively applying it to just one.
Final Thoughts
The OBBB’s revisions to Section 174 provide long overdue relief to Taxpayers with domestic R&E spend. Small businesses taxpayers must act quickly to determine the best pathway to take advantage of this relief. All Taxpayers and practitioners should pay close attention to Rev. Proc. 2025-28 to ensure the necessary elections and statements are included in Taxpayers’ returns.
How Can Schneider Downs Help?
Schneider Downs helps businesses identify and claim R&D tax credits across industries like manufacturing, software, logistics, and construction. Whether you need a full study or a review of your current calculation, our team can help you uncover opportunities and maximize your return. For more information contact us at [email protected].
This article is part of our ongoing series on the potential impact of the One Big Beautiful Bill. You may view our full library on our OBBB Resource Center.
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