Dated hub, published September 29, 2026

R&D Tax Credit Changes for 2026: What’s New

The federal R&D credit itself did not change for 2026: the §41 rates, the four-part test and the QRE categories are the same. Almost everything around it did. Domestic research is deductible again under §174A, §280C(c) now links that deduction to the credit, Form 6765 Section G becomes mandatory for non-exempt filers with tax years beginning in 2026, refund claims carry specific information requirements, and two states in our registry changed their credits. Here is each change, who it affects, and the guide that covers it.

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Timeline

From OBBBA to the 2027 filing season

Nine dates that decide how 2025 and 2026 R&D credit returns are built. Each change applies by the date your tax year begins, so fiscal-year filers should read the rule, not just the calendar year.

Illustrative timeline of federal and state changes affecting R&D credit filers, July 2025 through the 2027 filing season. Dates for fiscal-year filers differ; each change applies by the date your tax year begins. General information, not tax advice.

Federal

The federal changes, one by one

What changed, who it affects, what to do about it, and where to read more.

1. §174A: domestic research is deductible again

Federal law Tax years beginning after Dec 31, 2024

What changed

The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) added §174A. Domestic research or experimental expenditures are deducted in full in the year paid or incurred, or amortized over at least 60 months by election. Foreign research stays on 15-year amortization under §174. By election on the return for the first tax year beginning after 2024, the unamortized 2022-2024 domestic balance can be deducted in that year or spread over two years; without the election it keeps amortizing on the old five-year schedule.

Who it affects

Every business with domestic research spending, whether or not it claims the credit. Calendar-year filers first applied it on 2025 returns.

What to do

Make sure the §174A deduction and the credit come from the same wage allocations and ledger mapping, and confirm whether your 2025 return made the catch-up election (full or two-year) or kept the old amortization before the 2026 return is built.

Section 174A expensing Section 174 vs Section 41

2. §280C(c) now reduces the deduction by the full credit

Federal law Tax years beginning after Dec 31, 2024

What changed

P.L. 119-21 rewrote §280C(c)(1): domestic R&E deducted or capitalized is reduced by the full amount of the §41 credit. The alternative is the reduced-credit election under §280C(c)(2), which keeps the deduction whole and multiplies the credit by 79%. In 2022-2024 the reduction applied only to any excess of the credit over the year’s amortization deduction, so the choice rarely mattered. Now it matters for every claimant.

Who it affects

Every §41 claimant. Pass-through owners taxed above or below 21% and companies in a loss year feel the difference most.

What to do

Model both paths before the original return is filed. The reduced-credit election is made on a timely filed return, including extensions, and it is irrevocable.

The §280C election Section 174 vs Section 41

3. The small-business retroactive §174A window closed

Deadline Closed July 6, 2026

What changed

Taxpayers meeting the §448(c) gross receipts test for their first tax year beginning after December 31, 2024 could elect to apply §174A back to 2022-2024 years, generally by amending those returns. Rev. Proc. 2025-28 set the general deadline at July 6, 2026.

Who it affects

Smaller companies that capitalized domestic research in 2022-2024. The window is closed; it is listed here as history, not as an option.

What to do

Nothing to file under this election now. If the return for your first tax year beginning after 2024 is not yet filed, the §70302(f)(2) catch-up election can still speed recovery of the unamortized balance; otherwise it keeps amortizing on the old schedule.

Section 174A expensing

4. Form 6765 Section G becomes mandatory

Form 6765 Tax years beginning after Dec 31, 2025

What changed

Section G asks for business-component detail on the return itself. The Instructions for Form 6765 (Rev. December 2025) make it optional for all filers for tax years beginning before 2026 and required for tax years beginning after 2025. IR-2025-99 (October 1, 2025) set that timetable.

Who it affects

Every filer with a tax year beginning after 2025, except two groups: a qualified small business claiming the reduced payroll tax credit; and a filer whose total QREs at the controlled-group level are $1.5 million or less, whose average annual gross receipts for the prior three years are $50 million or less under §448(c)(3), and which reports the credit on an original return. The second exemption needs all three conditions, and an amended return loses it.

What to do

Build 2026 records by business component now. Section G asks for information by component, and it is far easier to capture during the year than to reconstruct for a 2027 filing.

Form 6765, line by line Section G: what changed

5. Refund claims carry specific information requirements

IRS guidance Transition runs through Jan 10, 2027

What changed

A research credit claim on an amended return that adds or increases a §41 credit must, at filing, identify all business components the claim relates to, identify the research activities performed for each, and give total qualified wage, supply and contract research expenses. The names of the individuals and the information each sought to discover were waived at filing effective June 18, 2024, but may still be requested on examination. The transition period that gives 45 days to perfect a deficient claim was extended by IR-2025-99 through January 10, 2027.

Who it affects

Anyone amending a prior-year return to add or increase an R&D credit.

What to do

Assemble the business-component list and the activity descriptions before the amended return goes out; a claim missing them risks rejection once the transition period ends.

Documentation and substantiation Form 6765, line by line

6. The payroll tax offset is still up to $500,000

Context, not new Since tax years beginning after Dec 31, 2022

What changed

Not a 2026 change, but a common question. The Inflation Reduction Act doubled the §41(h) ceiling to $500,000 a year for tax years beginning after December 31, 2022, applied each quarter against the employer share of social security tax (up to $250,000 a quarter) and then the employer share of Medicare tax. A qualified small business has gross receipts under $5 million in the credit year and no gross receipts in any year before the five-year period ending with it.

Who it affects

Startups and other qualified small businesses with payroll but little or no income tax.

What to do

Make the election on a timely filed original return, then attach Form 8974 to Form 941 starting with the first quarter that begins after the return is filed.

Payroll tax offset Form 8974, step by step

States

State R&D credit changes for 2026

Our registry covers 23 states. Of those, 2 record rule changes between their 2025 and 2026 regimes; the other 21 carry the same rules into 2026. This list is generated from the registry itself.

Arizona

Partial refund repealed for 2026 tax years

The registry records Arizona’s partial-refund program as repealed for tax years beginning after December 31, 2025 (H.B. 4168, Ch. 140, Laws 2026). For 2026 and later years the credit is nonrefundable, with unused amounts carried forward up to 10 years. Tax years beginning before 2026 follow the prior regime.

Arizona R&D tax credit guide Texas

New Subchapter T credit for reports due on or after Jan 1, 2026

The registry records Texas’s franchise tax R&D credit as moved to Tax Code chapter 171, subchapter T (S.B. 2206) for reports due on or after January 1, 2026: 8.722% of qualified research expenses above the base, or 10.903% where the entity contracts with a Texas institution of higher education, and refundable for an entity with no franchise tax due. Prior-period claims follow the prior regime.

Texas R&D tax credit guide

Conformity is a separate question. Whether a state follows federal §174A expensing is decided by its own conformity rules, and it does not always match the federal answer. Check each state you file in. The full registry, rates and refundability are on the state R&D credits hub, and our 2026 state rates and refundability roundup compares them side by side.

Q4 2026

Key R&D credit dates for Q4 2026

Calendar-year dates. Fiscal-year filers should count from their own year end.

Key R&D credit dates, September 2026 to January 2027
Date	What happens	Why it matters for the R&D credit
Sep 15, 2026 Tuesday	Extended 2025 returns for calendar-year partnerships and S corporations were due.	Credit elections made on those returns had to be on a return filed by this date to be timely.
Before Oct 1, 2026	A qualified small business that files its 2025 return making the §41(h) election before October 1 can start the payroll credit in Q4 2026.	The credit first applies on the Form 941 for the quarter that begins after the income tax return making the election is filed.
Oct 15, 2026 Thursday	Extended 2025 returns are due for calendar-year C corporations (Form 7004) and individuals (Form 4868).	The §280C(c) reduced-credit election and the §41(h) payroll election both ride on a timely filed return, including extensions. Neither is something to plan to add on an amended return. For a calendar-year taxpayer, the 2025 return is also where the §70302(f)(2) catch-up election for unamortized 2022-2024 domestic research costs is made. A return filed on October 15 starts a payroll credit in Q1 2027. See the §280C guide and the payroll offset guide.
Nov 2, 2026 Monday	Third-quarter Form 941 is due. October 31 falls on a Saturday, so the next business day applies.	A qualified small business already using a payroll election attaches Form 8974 to the 941 when it claims the credit.
Dec 31, 2026 Thursday	Calendar-year 2026 tax years end.	It is the first tax year for which Form 6765 Section G is required of non-exempt filers. Records made during the year are the ones that hold up.
Jan 10, 2027	The research credit refund-claim transition period runs through this date.	During the transition, a deficient claim gets 45 days to be perfected before the IRS makes a final determination.

Calendar-year taxpayers. Weekend and holiday rules can move a due date to the next business day; confirm your own dates with your tax preparer.

Why the original return matters so much

§280C(c)(2)(C) requires the reduced-credit election to be made on the return, no later than its due date including extensions, and makes it irrevocable. §41(h)(4)(A) requires the payroll election on or before the same due date. A late or amended return is the wrong place to discover either decision was never made.

Planning for the year-end

Calendar-year 2026 is the first Section G year for non-exempt filers. The records that answer it, tied to business components, are cheapest to capture before December 31. Our year-end R&D credit checklist walks through them.

What did not change

For all the movement around it, the core of the credit is the same law it was in 2024. That is worth saying plainly, because a surprising amount of 2026 commentary blurs the deduction and the credit together.

2026 R&D credit questions

Did the R&D tax credit rate change for 2026?

No. The regular credit is still 20% of QREs above a base amount, and the alternative simplified credit is still 14% of QREs above half the prior three-year average, or 6% if any one of those years had no QREs. The four-part test and the QRE categories are also unchanged. What changed is the deduction beside the credit, the §280C(c) link between them, and the reporting on Form 6765. See calculation methods.

Is Form 6765 Section G required on my 2025 return?

No. Under the Instructions for Form 6765 (Rev. December 2025), Section G is optional for all filers for tax years beginning before 2026. It becomes required for tax years beginning after 2025, which for a calendar-year taxpayer means the 2026 return filed in 2027, unless one of the two exemptions applies.

Can I still amend 2022-2024 returns to deduct research costs under §174A?

Not under the small-business retroactive election: its general deadline under Rev. Proc. 2025-28 was July 6, 2026. The unamortized 2022-2024 domestic balance can instead be recovered faster by election on the return for the first tax year beginning after December 31, 2024, in full in that year or over two years; without the election it continues on the old five-year schedule. An amended return to add or increase an R&D credit is a different question, governed by the refund-claim rules on this page.

My company files on extension. What should be settled before October 15, 2026?

The credit computation, the §280C(c) decision and, for a qualified small business, the §41(h) payroll election. Both elections have to be on a return filed by its due date including extensions, and the reduced-credit election cannot be revoked. For a payroll-offset company, the filing date also sets which quarter the credit starts in.

Which states changed their R&D credits for 2026?

Of the 23 states in our registry, two record rule changes between their 2025 and 2026 regimes: Arizona repealed its partial refund for tax years beginning after December 31, 2025, and Texas moved its franchise tax credit to a new subchapter with higher rates and refundability for entities with no tax due. Each state page has the detail. See state R&D credits.

Start with the R&D credit overview if you want the whole picture, or see every topic in the R&D credit FAQ.

Primary sources

The statutes, IRS releases and state sources behind each change.

Reflects legislation and IRS guidance published through September 2026 and the state registry exported 2026-09-10. Rules change between filing seasons; confirm the treatment for your taxable year with a qualified professional before acting.

Build your 2026 claim to the 2026 rules

Section G, §280C(c) and §174A all reward records made during the year. Tell us about your R&D, and our R&D experts will scope the credit and the documentation your CPA or tax preparer needs to file.

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