Small Business R&D Rule Updates After the OBBBA

The One Big Beautiful Bill Act (OBBBA) represents a turning point for small and mid-sized businesses. While it delivers broad permanent tax relief through enhanced deductions and expensing limits, one of the most impactful changes lies in how companies can treat research and development (R&D) expenses. For many business owners, this means opportunities not just going forward, but looking back and reclaiming dollars that were missed.

On August 28, 2025, the IRS issued Revenue Procedure 2025-28, providing detailed guidance on how to apply the OBBBA’s R&D provisions. This guidance matters because it creates a clear, time-sensitive path for small businesses to deduct R&D expenses immediately, amend prior returns, and in many cases, generate refunds. For companies investing in product development, process improvements, or software, these rules open the door to tax savings that may have been out of reach in the past.

Why This Matters for Small Businesses

If your business has gross receipts under $31 million, you fall into the category Congress specifically aimed to help. Under Rev. Proc. 2025-28, eligible small businesses can retroactively apply the OBBBA rules to tax years beginning after December 31, 2021. That means you may be able to amend your 2022, 2023, or 2024 returns and capture deductions you previously had to spread out, effectively putting cash back into your business.

The IRS also confirmed that taxpayers who filed 2024 returns without an extension may supersede those returns to apply the OBBBA provisions. For business owners who rushed to file in spring 2025, this is an unexpected second chance to revisit those filings and claim additional deductions.

Key Opportunities

• Retroactive Relief: Amend 2022 and later returns, or file a change in accounting method, to immediately deduct R&D costs and potentially generate refunds.
• Payroll Tax Offsets: Use credits more effectively by applying them against payroll taxes, improving cash flow in years without taxable income.
• Flexibility in Elections: Late or retroactive elections, including under IRC § 280C(c)(2), allow businesses to better coordinate deductions and credits.
• Tight Deadlines: Retroactive elections must be made by July 6, 2026, or earlier if the statute of limitations on refund claims runs out.

What This Means for You

For small businesses, these changes may be the most favorable R&D tax development in years. But the window is narrow. Amending returns takes time, and the documentation to support your claim must align with IRS standards. Waiting too long could mean missing out altogether.

At Strategic Tax Planning, we specialize in helping businesses like yours capture every available credit and deduction. Our team can quickly evaluate whether your past filings qualify, identify refund opportunities, and put a plan in place to secure these benefits before the deadlines close.

Do not assume you missed your chance—OBBBA gives you another opportunity. Reach out today to schedule a review. Even if you have already filed your 2024 return, there may still be time to generate significant savings. Call us at (202) 455-6010 or schedule a confidential consultation here.