One Big Beautiful Bill (OB3) Domestic Research & Development Expenses

This applies for tax years 2025 and later.

You can fully expense domestic R&D items in the year the expenses were incurred.

Software, land, land improvements, exploration, etc are not eligible R&D costs.

You can also elect to amortize (depreciate) these R&D costs for up to 60 months (5 years).  This election must be done by the tax return due date.  Once you elect a method for a given tax period, you are committed to that method unless you receive IRS consent for a change of amortization period.

For tax years 2022-2024, taxpayers may elect to go back and change how these R&D expenses are deducted.  This election must be made within 1 year of the enactment date of the OB3.  To do this, the taxpayer must file an amended tax return for each applicable year.  The IRS has not yet given guidance on how taxpayers can make this election.

For tax years 2022-2024, taxpayers have a 2^nd option.  You can deduct all of the remaining un-amortized R&D expenses for 2022-2024 on the 2025 tax return.  In this scenario, you would not have to amend any tax return.  Keep in mind that amending a tax return re-starts the 3-year clock as it relates to audit potential.