IRS Restores Full Research and Development Expensing
August 29, 2025
We wanted to share important news from the IRS that could have a significant impact on your tax strategy.
On August 28, the IRS released Revenue Procedure 2025-28, restoring full expensing for domestic research and development (R&D) costs under the One Big Beautiful Bill Act (OBBBA). This reverses the prior requirement to amortize R&D expenses over five years — and opens the door to immediate deductions and potential refunds.
Key Highlights:
- Full expensing is now allowed for domestic R&D costs incurred after December 31, 2024
- Small businesses (under $31M in gross receipts) may retroactively apply this rule to 2022–2024
- Superseding 2024 returns and automatic method changes are available
- Foreign R&D remains amortized over 15 years, but method changes are permitted
- New flexibility around R&D credit elections under IRC § 280C(c)(2)
These changes present a timely opportunity to revisit your prior filings, optimize your current strategy, and potentially recover cash through amended returns.
We recommend scheduling a brief consultation to assess your eligibility and determine next steps.
