Year-End R&D Tax Credit Checklist for 2026

The short answer: most of the R&D credit work that matters for 2026 has to happen before December 31, because it is evidence work. Tax years beginning in 2026 are the first for which Form 6765 Section G, the business-component detail, is required unless you qualify for an exemption, and Section G can only be filled from records kept while the work was happening. The rest of the list is timing: two elections that depend on a timely filed original return, the quarter a payroll offset starts, and state application deadlines that fall in November and December.

The checklist table near the end is the working list; the sections above it explain each item. Dates assume a calendar-year taxpayer. New to the credit? Start with the R&D tax credit guide.

Is Section G required for your 2026 tax year?

The current Instructions for Form 6765 (Rev. December 2025) settle the timing: “For tax years beginning before 2026, Section G will be optional for all filers,” and “For tax years beginning after 2025, Section G will be required.” For a calendar-year company, the 2026 return you file in 2027 is the first one.

Section G is required unless one of two exemptions applies:

1. You are a qualified small business under §41(h)(3) and you checked the box to claim the reduced payroll tax credit; or
2. All three of these hold: total QREs on line 48, determined at the controlled group level, are $1.5 million or less; average annual gross receipts for the prior three tax years are $50 million or less (under §448(c)(3)); and you are reporting the credit on an original return.

An amended return loses the second exemption. And even an exempt filer still reports, on line 37, the total number of business components generating its QREs. Our Section G explainer walks through the columns one by one.

1. Start business-component records now

A business component is a product, process, computer software, technique, formula or invention (§41(d)(2)(B)), and the four-part test applies to each one separately. Section G reports QREs by component, so the component list is the spine of the 2026 claim.

• Name components the way your books already do. The instructions ask for an identifier “consistent with how you maintain the books and records that substantiate the qualified research activities.” If the ticketing system, the ledger and the tax file use three different names for one project, fix that now.
• Split wages three ways. Section G columns 50 through 52 separate wages for people who conduct research, people who directly supervise it (first-line management only) and people who directly support it. A single blended “R&D percentage” per employee cannot be split after the fact.
• Know the 80%/Top 50 rule. You report components in descending order of QREs until you cover at least 80% of total QREs, capped at 50 components, with the remainder on one aggregate line.

2. Capture time and activity while it happens

The regulations set the standard: a taxpayer “must retain records in sufficiently usable form and detail to substantiate that the expenditures claimed are eligible for the credit” (Treas. Reg. §1.41-4(d)). A year-end survey of what engineers remember rarely meets it.

What works is evidence your teams already produce, tied to components as it is created: tickets and pull requests, design documents, test plans and results, experiment logs, and notes on the alternatives that were tried and rejected. That last item is the process of experimentation, and it is the hardest part to reconstruct later.

3. Review contracts for funded research

Research funded by a grant, contract or otherwise by another person is excluded (§41(d)(4)(H)). The regulations look at all agreements, not only research contracts. Two tests decide most cases: whether payment is contingent on the success of the research, and whether you keep substantial rights in the results. If you keep no substantial rights, the research is treated as fully funded (Treas. Reg. §1.41-4A(d)).

Before year-end, pull customer contracts, statements of work, grants and SBIR awards performed in 2026 and note the payment and rights terms for each. Payment terms such as acceptance criteria and milestones speak to the first test; IP ownership and license terms speak to the second.

On the other side of the ledger, research you pay others to perform generally counts at 65% of the amount paid, 75% for a qualified research consortium, and 100% for qualified energy research performed by an eligible small business, university or federal laboratory.

4. Tag supplies and cloud costs to components

Supplies are tangible property other than land, improvements to land and depreciable property (§41(b)(2)(C)), used in the conduct of qualified research. General and administrative costs do not qualify. Amounts paid to another person for the right to use computers in the conduct of qualified research can also count (§41(b)(2)(A)(iii)).

Section G wants both per component (columns 54 and 55), so tag them at each month-end close. Keep development and test environments separate from production hosting that serves customers, which is not used in the conduct of research.

5. Decide ASC or regular credit, and the evidence each needs

• Alternative Simplified Credit (ASC): 14% of current QREs above 50% of the average QREs of the prior three years, or 6% of current QREs if you had no QREs in any of those three years. It needs three prior years of QREs computed consistently.
• Regular credit: 20% of QREs above a base amount equal to a fixed-base percentage times average gross receipts for the prior four years, with a minimum base of 50% of current QREs. It needs gross receipts and historical QRE data to support the fixed-base percentage.

The ASC is elected on a timely filed original return, and the instructions allow it on an amended return only if you had not already claimed the credit for that year on an original or amended return. Model both before you file; the R&D tax credit calculator gives a first estimate.

6. Know which elections need a timely original return

Two elections cannot be fixed later:

• §280C(c) reduced credit. Made on Item A of Form 6765. The instructions say the election must be made on your “original timely filed return, including extensions,” and “cannot be made or changed on an amended return.” Once made it is irrevocable for the year. It reduces the credit by the product of the credit and the top corporate rate (21%), and in exchange you do not reduce your §174A deduction by the credit. See our §280C election guide.
• §41(h) payroll tax election. A qualified small business can elect up to $500,000 of the credit against employer payroll taxes. The election “must be made on or before the due date of the originally filed income tax return (including extensions),” and no more than five elections are allowed.

For 2025 returns, the extended deadline for calendar-year C corporations and individuals was October 15, 2026. If your 2025 return was filed by then, both elections are already set for that year. If it was not, neither can be made for 2025 on a later return. For the 2026 year, make both decisions before the 2027 return is filed, not after.

7. Plan when the payroll offset starts

A qualified small business claims the payroll credit “for the first quarter that begins after it files the return reflecting the payroll tax election,” by attaching Form 8974 to its employment tax return.

• A 2025 return filed on October 15, 2026 starts the offset in the quarter beginning January 1, 2027.
• For 2026, a return filed in March 2027 starts the offset in the quarter beginning April 1, 2027.

Tell your payroll provider or PEO in writing, because the party filing Form 941 is the one who attaches Form 8974. See the Form 8974 guide for the line-by-line mechanics.

8. Coordinate the credit with the §174A deduction

Under §174A, domestic research or experimental expenditures are deductible again for amounts paid or incurred in tax years beginning after December 31, 2024. Foreign research still amortizes over 15 years under §174. The two benefits interact through §280C(c): unless you make the reduced-credit election, the §174A deduction is reduced by the amount of the credit.

The §174A pool and the §41 QRE pool overlap but are defined differently, so compute both from the same underlying records rather than two separate spreadsheets.

9. State deadlines in the fourth quarter

• Maryland: applications to the Department of Commerce for 2025 expenses are due November 15, 2026, and the portal is listed as open through November 16. The credit cannot be claimed without Commerce’s certificate. Details in our Maryland deadline guide.
• Pennsylvania: the Department of Revenue’s R&D tax credit application period opens August 1, and applications must be completed and submitted in myPATH by December 1. The credit may be sold, subject to the department’s approval.

Other states use different forms, windows and caps. Our 2026 state R&D credit table is built from the same rules registry our platform computes from.

10. December 31 cutoffs

• QREs belong to the year they are paid or incurred (§41(b)(1)). Close 2026 with wages, supplies and contract research assigned to 2026 components.
• Prepaying contract research does not pull QREs forward. The instructions say prepaid contract research expenses “are considered paid in the year the research is actually done.”
• Reconcile wages. QRE wages use the income tax withholding definition in §3401(a), which is why studies generally reconcile to W-2 wages. Pull the data in January while it is fresh.
• Remember the base. Each year’s QREs feed the ASC base for the next three years, so a well-documented 2026 also supports 2027 through 2029.

The year-end checklist

Year-end R&D tax credit checklist, 2026

Year-end R&D tax credit checklist, 2026

Task	Why it matters	When	Owner
Confirm whether Section G applies to 2026	Required for tax years beginning after 2025 unless an exemption applies	Now	Tax or finance lead
Build the 2026 business-component list	Section G reports by component; the four-part test applies per component	Before December 31	Engineering leads with finance
Capture time by component and role	Wages split into conduct, direct supervision and direct support	Ongoing; close out at year-end	Engineering managers
Keep contemporaneous evidence	Treas. Reg. §1.41-4(d) records standard	Ongoing	Project owners
Review 2026 contracts and grants	Funded research is excluded	Before December 31	Legal or finance
Tag supplies and cloud costs to components	Section G columns 54 and 55; production hosting stays out	Each month-end close	Accounting
Map contract research vendors	65% generally; prepaid amounts count when the research is done	Before December 31	Accounting
Model ASC against the regular credit	Method choice belongs on the timely original return	Before the 2027 filing	Tax, with your CPA
Decide the §280C(c) posture	Original timely return only; irrevocable	Before the 2027 filing	Tax, with your CPA
Check QSB status and the payroll election	Timely original return only; offset starts the quarter after filing	Before the 2027 filing	Tax and payroll
Brief the payroll provider	Form 8974 is attached to the employment tax return	When the return is filed	Finance
Maryland application for 2025 expenses	No Commerce certificate, no credit	By November 15, 2026	Tax
Pennsylvania R&D credit application	Applications close December 1	By December 1, 2026	Tax
Reconcile QRE wages to W-2 data	QRE wages follow §3401(a)	January 2027	Payroll and finance

FAQ

Do we need Section G if we elect the payroll tax offset?

Not if you are a qualified small business under §41(h)(3) and you check the box to claim the reduced payroll tax credit. That is the first of the two exemptions in the current instructions.

The October 15 deadline has passed. Can we still claim the 2025 credit?

If the 2025 return was filed on time, the credit and any elections are already on it. A first-time claim on an amended return is generally still possible within the refund claim period, but without the §280C(c) and §41(h) elections, and the claim must identify the business components, the research activities for each, and total qualified wage, supply and contract research expenses.

Does prepaying contract research in December increase our 2026 credit?

No. The Form 6765 instructions treat prepaid contract research expenses as paid in the year the research is actually done.

When does a payroll offset elected on the 2026 return start?

In the first calendar quarter that begins after you file the return making the election. File earlier and the offset starts earlier.

Is Section G required on amended returns for earlier years?

For tax years beginning before 2026, Section G is optional for all filers, including on amended returns. An amended refund claim still has to include the claim information the IRS requires.

Sources

• IRS - Instructions for Form 6765 (Rev. December 2025) and About Form 6765
• IRS - IR-2025-99, IRS extends the period for feedback on Form 6765
• IRS - About Form 8974
• IRC §41, IRC §174A and IRC §280C (Cornell Law School, Legal Information Institute)
• 26 CFR §1.41-2, §1.41-4 and §1.41-4A (eCFR)
• Maryland Department of Commerce - Research and Development Tax Credit
• Pennsylvania Department of Revenue - R&D Tax Credit Program