IRS Guidance Arrives for R&D Expensing Under OBBBA

by | Sep 17, 2025 | Federal Tax, Main Tax Min, Tax Minimization, Tax News | 0 comments

The IRS issued Rev. Proc. 2025-28, detailing elections, disclosures & accounting changes for R&D and §174 expenses under new post-TCJA tax rules.

On August 28, 2025, the IRS released Revenue Procedure 2025-28, a 61-page guide for taxpayers navigating their way through new laws for the treatment of R&D and §174 expenses.

The comprehensive guidance specifies how companies can (1) elect to immediately deduct or amortize domestic R&D expenses paid or incurred in tax years beginning after December 31, 2024, and (2) options for recovering previously capitalized R&D expenses from 2022-2024 under the Tax Cuts and Jobs Act (TCJA).

Specifically, Rev. Proc. 2025-28 establishes implementation procedures for:

  • Domestic R&D expense treatment
  • Retroactive recovery of capitalized R&D (2022–2024)
  • Eligible small business elections
  • Section 280C elections and revocations
  • Filing guidance
  • Automatic accounting method changes
  • New disclosure statements and filing requirements
  • Updates to Rev. Proc. 2025-23

The Takeaway

Rev. Proc. 2025-28 provides much needed guidance on elections and accounting method changes under OBBBA standards as well as defines the requirements of additional statements and disclosures necessary in filing. These rules, however, are complex. Implementing this guidance means strategic decisions must be made on how a business taxpayer proceeds.

Now is the ideal time to work with your TaxOps advisor to proactively review your R&D expenses, reduce compliance risk, and leverage opportunities to advantageously move forward.

Eligible for R&D Credits?

Any company that develops new or improved products, processes, or software—in some cases, whether profitable or not—may qualify for these lucrative credits. Wondering if you are eligible to take advantage of lucrative research credits that could cut your federal and state tax liability? 

Find out here! Eligible for Lucrative R&D Credits?

The More You Know

Disclaimer: This content is for educational purposes only and is not intended, nor should it be relied upon, as legal, tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented. 

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