Beyond Amortization: The OBBBA Transforms R&D Tax Credit Strategy

Businesses historically underutilize research and development (R&D) tax credits, partially due to a lack of awareness and, in recent years, the federal amortization requirement. However, after the passage of the H.R.1 - One Big Beautiful Bill Act (OBBBA), it’s time to revisit your R&D tax credit strategy and take advantage of the bill’s monumental changes to the federal R&D tax credit.

Retroactive Return of Full, Immediate R&D Expensing

Under the “Tax Cuts and Jobs Act of 2017” (TCJA), businesses were required to capitalize and amortize domestic R&D costs over a five-year period – or a 15-year period, for foreign R&D expenditures – for tax years beginning after Dec. 31, 2021. This change significantly impacted many small businesses and startups’ cash flow and financial projections.

The OBBBA removes the amortization requirement, reinstates the full expensing of R&D costs in the year they are incurred, and allows qualifying small businesses to apply immediate expensing retroactively to tax years beginning after Dec. 31, 2021. 

• Read Acena Consulting’s complete OBBBA analysis, written by the Head of R&D, Rae Smoltz, BSBA, BSENRE.

These changes allow companies investing in R&D to make the most of the federal R&D tax credit.

How the OBBBA Elevates Your Bottom Line

If your business previously skipped the federal R&D tax credit, now is the time to reconsider.

Here's how the OBBBA strengthens R&D’s financial benefits:

• Enhanced cash flow: 
  • With full retroactive expensing back on the table, the tax savings from qualifying R&D work can significantly impact your current-year bottom line.
• Better return on investment (ROI) of innovation: 
  • Independent of your sector – agriculture, energy, manufacturing, or technology – your R&D investments have clear tax advantages.
• Readier compliance: 
  • The new legislation raises documentation standards while providing increased guidance, so you can claim the federal R&D tax credit with confidence.

Seizing the OBBBA Opportunity

Now is the time to start a conversation about your business’ R&D strategy with your tax team. 

• Investigate your eligibility.
  • You may be performing more R&D than you realize. If you are developing or improving products or processes, building prototypes, or solving technical challenges, then you likely qualify for R&D tax credits.
• Consult an R&D tax specialist.
  • Partnering with a qualified R&D tax specialist can help you identify qualified activities, properly document them, and maximize your claim.
  • Acena Consulting (Acena) is here to help you navigate the changes to the R&D landscape and ensure you maximize the value of your claim.
    • Schedule a free consultation with Randy Eickhoff, CPA, Acena’s Founder & Head Coach, for immediate assistance.
• Act before the year’s end.
  • Collecting contemporaneous documentation ASAP is essential to maximizing your credit and expense deductions under the new rules.

Get the Latest OBBBA Insights

Read Acena Consulting’s complete OBBBA analysis, written by the Head of R&D, Rae Smoltz, BSBA, BSENRE. (So nice, we linked it twice!)

Register for our free monthly webinar, next on Aug. 19th, 2025: “Cracking the (Tax) Code for R&D.”

• This workshop provides one CPE credit for professionals who are keeping up with continuing education.
• Learn more about qualifying and documenting R&D activities for tax incentives.

Lastly, to keep up with Acena and get the latest updates on tax policy and industry-specific incentives, visit our Acena Events page and follow Acena on LinkedIn and X.

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Edited by Laura Whittenburg, MSBME, Sr. Technical Writer at Acena Consulting. Photo courtesy of O Palsson on Flickr.