Immediate Expensing Begins in 2025
Starting in 2025, the One Big Beautiful Bill Act allows businesses to immediately deduct domestic Research and Development (R&D) expenses. This marks a major shift from the prior rules, which required companies to amortize R&D costs over multiple years.
This change:
Simplifies tax treatment
Reduces up-front tax burdens
Improves cash flow
Supports ongoing innovation and development
The provision applies through 2029 and benefits companies investing in new products, technologies, and process improvements.
Cash Flow Benefits and Accounting Considerations
With immediate expensing restored, businesses with eligible R&D activities should:
Review current accounting methods
Update expense tracking procedures
Confirm documentation supports qualification
Prepare to claim the full deduction once the law takes effect
Proactive planning ensures smooth implementation and maximized tax benefits.
Treatment of Previously Capitalized R&D Costs
The Act also provides relief for expenses incurred in earlier years. All taxpayers may elect to deduct their remaining unamortized R&D expenses beginning in tax years after December 31, 2024, over a one- or two-year period.
Additionally, certain small taxpayers may file amended returns for 2022–2024 to deduct R&D expenses that were previously required to be capitalized.
Get Guidance for Your R&D Tax Strategy
If you need help evaluating your R&D costs, adjusting accounting methods, or planning for these changes, our advisors are ready to assist.
For support, please call us at (401) 921-2000 or contact us here.