If your business incurred costs developing new or improving upon existing products, processes, or building software between 2022 and 2024, there’s a good chance you overpaid taxes and have a limited amount of time to recover that money.

That window closes on July 6, 2026.

Here’s what changed, who qualifies, and what businesses should do before the deadline passes.

How Section 174 Changed R&D Deductions in 2022

In 2022, Section 174 capitalization rules quietly changed how businesses could deduct research and development expenses.

Before 2022, companies could typically deduct qualifying R&D expenses immediately. Once the new Section 174 amortization rules took effect, businesses were instead forced to spread those deductions across multiple years.

For domestic research expenses, that meant amortizing costs over five years.

The impact was immediate. And resulted in many businesses staring down significantly higher tax bills.

Spend $100,000 on qualifying R&D in 2022? Only $10,000 was deductible that year. The remaining $90,000 had to be spread across the next four years.

For many small businesses, it became a real cash flow problem disguised as tax policy. Companies investing heavily in product development, engineering, software, manufacturing, or process improvement suddenly found themselves paying taxes on income that had effectively already been reinvested back into the business.

Most accepted it because they assumed there was no alternative.

That has now changed.

The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, restored immediate R&D expensing beginning in 2025. Businesses can once again deduct qualifying research and development expenses in the year they are incurred.

More importantly, qualifying small businesses may also be able to retroactively file for unclaimed R&D tax credits in prior years.

The Retroactive Section 174 Opportunity for 2022–2024

Intended as relief for American businesses, the OBBA included a carve out that enables qualifying businesses file for previously unclaimed 2022-2024 R&D tax credits without the need to amortize any associated research costs.

That means businesses can revisit their 2022, 2023, and 2024 returns and seek to secure tax savings opportunities that were previously passed over because of the pre OBBA rules.

However, this relief provision came with a catch. July 6, 2026 is the deadline qualifying businesses must file their 2022-2024 R&D tax credit claims in order to take advantage of not also having to amortize their research expenses.

But there’s an important complication many businesses still haven’t identified.

For some businesses, the statute of limitations to amend their returns may expire before July 6. A business that filed its 2022 return before July 6th will still have to file their 2022 R&D tax credit claim by the date the return was originally filed.

In other words, the actual filing window may already be shorter than it appears.

Many firms still haven’t proactively reviewed this with clients. That’s why waiting is risky and could result in considerable tax savings left on the table.

Who Qualifies for the Retroactive R&D Election?

Eligibility is primarily based on business size.

If your company averaged $31 million or less in annual gross receipts during years 2022-2024, you may qualify to amend 2022, 2023, and 2024 returns under the new rules.

It is also important to note that it is not an all or nothing scenario. Businesses can decide to claim the R&D credit for one, two or all three years.

That’s why understanding the full impact before filing matters.

What Expenses Qualify for the R&D Tax Credit?

This is where many businesses underestimate eligibility.

The research and development tax credit is not limited to pharmaceutical labs or venture-backed software startups.

Qualifying activities may include:

• Developing or improving products

• Building or improving software or internal tools.

• Designing prototypes or custom equipment

• Improving manufacturing processes

• Testing new materials or formulations

• Solving technical or engineering uncertainty

• Creating new production methods or workflows

Industries ranging from agriculture and manufacturing to architecture and engineering regularly qualify.

One 48,000-acre farm received more than $1.16M in federal and state R&D credits after evaluating new seed treatments, hybrid performance, and crop protection strategies.

An architectural firm focused on sustainable design solutions, energy-efficient layouts, and site-specific engineering received approximately $1.88M in credits.

An engineering firm developing alternative structural systems and testing performance under seismic and environmental conditions received roughly $2.4M in credits.

What Businesses Should Do Before the Deadline

Businesses considering the retroactive election should:

• Verify they fall under the applicable gross receipts threshold

• Pull 2022–2024 payroll, contractor, and supply expenses tied to development work

• Determine whether R&D costs were amortized under Section 174

• Confirm applicable statute of limitations deadlines

• File amended returns with an R&D tax credit claim before the filing window closes

The process itself is manageable when handled correctly.

The larger risk is assuming your current advisor is already tracking it.

This Is a Rare Opportunity

Most tax planning focuses on future optimization.

This is different.

The OBBBA created a temporary opportunity for qualifying businesses to revisit prior years and claim tax credits that were previously deferred because of the most disruptive R&D tax policy changes in recent years.

Once the filing window closes, the opportunity currently disappears permanently.

Why Onshore Built Around This Challenge

Too many firms treated Section 174 amortization like a compliance exercise instead of identifying what businesses were actually losing.

Onshore was built differently.

We combine AI-powered analysis with expert review to help businesses identify qualifying activities, calculate opportunities accurately, and produce audit-ready support without the delays and manual processes that have traditionally slowed these studies down.

If you’re unsure whether your business qualifies or what the opportunity could look like, now is the time to find out.